SBI Mutual fund is one of the most popular company in India. Moreover, there is an easy option for investing in the schemes. It can be done through SIP. SIP is Systematic Investment Plan. It is similar to investing in a recurring deposit. In a recurring deposit, the money is paid every month. In SBI SIP scheme also, the investment amount is paid monthly.
This method has many advantages. The money can be invested monthly, so middle class people can also invest in it. Other advantages of these schemes are dividends and average returns. Dividends are the profits earned from the investment. The dividends can be handled in two ways. One way is investing again in the same scheme. Another way is getting the cash directly. Though you buy more number of units at low NAV or less number of units at high NAV,
the value of investment does not change. Usually the returns are higher in funds. Another advantage of investing in these investments is rupee cost averaging. As you invest over a period of time, you will buy more number of units at low cost and less number of units at high cost. This results in low acquiring cost. This is called averaging.
SBI Systematic Investment Plans (SIP)
Most investment plans at State Bank of India Mutual Fund require you to start with an initial investment of at least Rs. 1000. However, if you opt for SBI Systematic Investment Plan, popularly referred to as SBI SIP Investment Plan, you can start investing in mutual funds with as little an amount as Rs 250/- per month. There are two options: you can either invest Rs. 250/- every month for 12 months or Rs. 500 each month for six months.
A total of Rs. 3000 would be collected at the end of the period, which can be used to buy mutual fund units in a systematic way. The SIP plan automatically buys you more units when the prices are low and fewer units when the prices are high. The mechanism helps you avail the benefit of “Rupee-cost averaging” and lower down the acquisition rate cost of acquiring one mutual fund unit. An SBI Systematic Investment Plan Calculator for Magnum Gilt Fund is available at the website of the bank. For the latest updates on the stock market, visit Stock Market Today
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