When you invest through SIP over a long period of time, you will average your purchase cost of units
19-Oct-2015 •Research Desk
The market goes up on my Systematic Investment plan (SIP) due date and my purchase cost increases. Won't this impact my profit?
- Sankar Narayanen
When you start investing via a Systematic Investment Plan (SIP) there would be occasions when the market is up or down. This would mean that your purchase cost goes up or down and the number of units allotted to you would also go up or down, depending on the market conditions. This would help you to average your purchase cost of units over a long period. And this is the basic principle - rupee cost averaging - behind investing via a SIP.