As defined by Investopedia, “A systematic investment plan (SIP) is a plan where investors make regular, equal payments into a mutual fund, trading account, or retirement account.” Simply put, it is a strategy of investment where investors regularly invest the same amount of money in a specific mutual fund, trading account, or retirement account over a specified duration of time.
The primary reason why investors seek SIPs is to participate in the stock markets without playing an active role in them. In that manner, SIPs go a long way in simplifying the entire process for investors and enabling them to benefit from a passive position. SIPs also tend to provide a strategy of investment that plays to be beneficial in more situations than not.
To do that, SIPs have to be carried out across a long-term timeframe. The reason SIPs work in most situations is because investors play it smart …