Whats an SIP?
Think of it as an EMI, but instead of paying a bill or loan, you’re paying yourself.
Thats all. End of Story.
S.I.P, stands for Systematic Investment Plan. Nooo, you said you’d make it simple!!!
Haha okay, like I said before, an SIP is basically a plan, where you transfer a sum of money to invest for fixed intervals (usually every month…yes…every…month) till whenever you want it to go on.
So next time you hear S.I.P in a conversation, you’ll not be like S-what-the-hell-are-you-talking-about-I-P.
So whats the investment here? Its usually a mutual fund, but you can do the same with stocks as well, depending on your demat account.
Well, well, well, I just threw sooo much at you just now. I’m glad you haven’t left yet.
I’m not going to get into stocks right this minute. Let’s take a quickkkk break. Go get some coffee and come listen to a story about mutual funds –
Okay so you have a group of 5 friends.
One of them is a financial whiz. She studies the market, she knows about random mergers and lucrative deals. She wears a suit and has some heavy finance background.
You all don’t know jack about money, so you ask her if she can invest your money for you.
So you say, ‘hey! Each of us will pay you a certain amount, can you please invest it for us?And we’ll share the profits (or loss)’
She says ‘ Ok, but pay me a fee for figuring out what goes where, coz it takes a fair amount of research to do this.’ You all say ‘ Kkk cool. Just invest our money plss.’
Now she takes that fee, irrespective of whether you make a profit or not. She’s putting in the effort to figure out where the money goes, how the money PERFORMS, is out of her control after she’s put the money in. That’s all, thats a mutual fund.
Mutual fund – They collect money from a bunch of people and a portfolio manager manages your money by investing it in various vehicles like stocks, bonds, securities, blah blah.
Now say, you all see that your money is doing quite well, you decide, we should make this a monthly thing. Now you have just invested in SIP through mutual funds.
TADAAAA!
The Money Wellness Studio 
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