How does SIP work?
- SIP is like a regular investment of a fixed amount, which is auto-debited from the investor’s bank account at a pre-defined date chosen by the investor.
- The amount is then transferred to the mutual fund company, which allocates a certain number of units of the fund to the investor, at their Net Asset Value (NAV) for the day.
- The amount invested remains the same at every interval. However, the number of units bought change, as NAV changes every day.
- The investor gets more units when the prices are low and less units when prices are high.