If we talk about investment, a Systematic Investment Plan (SIP) is mentioned. Most experts say to include it in the portfolio. It is considered a very good option in terms of making money because the returns it gives are not available in many schemes. This is the reason that despite being a market-linked scheme, people's trust in SIP has increased rapidly. But if you understand the mathematics of how SIP makes you profitable, then the doubts running in your mind about investing in it will be cleared.

Units are allotted on investment.
When you invest in a mutual fund through SIP, some units are allotted to you. Suppose the NAV i.e. Net Asset Value of a mutual fund is Rs 20 and you invest Rs 1000 in that mutual fund, then you will be allotted 50 units. Now as the NAV of the mutual fund increases, your invested money will also increase. If the NAV of the mutual fund becomes Rs 35, then the value of your 50 units will increase from Rs 1000 to Rs 1750.

This is how money grows fast.
When you invest every month through SIP, you get units allotted every month. When the market is bullish, you are allotted fewer units and when the market falls, you get more units for the same amount of investment. In this way, the risk of market fluctuations is reduced and your investment is made at an average price. Also, you get the benefit of compounding. That is, you keep getting returns on the returns you get every month. Due to this, you get rapid profits and the capital grows very fast.

The longer the SIP, the bigger the benefit.
The benefit of compounding is tremendous in SIP. Therefore, the longer the duration for which SIP is done, the greater the benefit you will get because, under compounding, you get a return on the amount invested as well as a return on return. This accumulates a lot of money in the long term.

SIP is also quite flexible

Apart from giving huge profits, the features of SIP are also very good. There is flexibility regarding the investment period and amount in SIP. That is, you can choose the option of a daily, monthly, quarterly, or half-yearly investment period at your convenience. You can close it and withdraw money from your SIP. Apart from this, you also get the option of pause in SIP. Taking advantage of this, you can stop SIP for a certain period and later you can continue again from there.

SIP also teaches you to save

Through SIP, you learn to save for a fixed period. Whatever amount you want to invest on a monthly, quarterly, or half-yearly basis, you spend the rest only after saving that amount. This way you get into the habit of disciplined investing.

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