How Does SIP Work?
See the above diagram. This is how SIP (Systematic Investment Plan) Works. Over the long time, SIP does Dollar-Cost-Averaging and brings your over all entry level in the market and that’s why the compound interest works best over the long time in SIP Investments.
Another great advantage of doing SIP is that, whenever the market will be high, you will end up with buying less amount of units and whenever the market is down, you will end up with buying more amount of units.
But in the real life, people do exactly reverse and that’s why they suffer. Means they buy more when the market is up and they buy less when the market is down. But to become a successful investor, you exactly need to do the opposite.
And SIP do this for you. Believe me, if you buy more when the market is down and less when the market is up, you will make a fortune in the long run. Many people have made a fortune by investing in SIP over a period of long time. SIP introduces discipline in your Investments and gives handsome return in the long run.
So the Best way to Invest in the Mutual Funds is via SIP.