Your money: SIP can work for debt funds, NPS and stocks, too
By Sunil K Parameswaran
Systematic Investment Plans or SIPs are often prescribed as an ideal solution for building a corpus. These plans require one to put aside a sum of money at periodic intervals and invest the savings in a mutual fund or a portfolio of mutual funds. This is a blind strategy, in the sense that investors do not try to time the market, by choosing an optimal time to invest.
The strategy is built on the concept of Dollar Cost Averaging in the US and what we would call Rupee Cost Averaging in India. The principle is that our investment will buy more units of the mutual fund when the NAV is low and less units when it is high. Consequently, the average cost per unit or share of the mutual fund will be lower than the average NAV.
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