SIP (Systematic Investment Planning)

A systematic Investment Plan (SIP) is an approach that involves investing a set amount at regular intervals rather than investing a larger lump sum amount in one shot. This way, you are not attempting to capture the highs and lows of the market but rather the cost of your investment is averaged over a period. The essence of SIPs is that when the markets fall, investors automatically acquire more units. Likewise, they acquire lesser units when the market rises. This means that you buy less when the price is high whereas you buy more when the price is low. Hence, the average cost per unit drops down over time.