Mutual Fund SIP: Four little-known hidden facts about SIPs. How it can impact investors' returns

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systematic investment plan (SIP) route. A SIP is often an effective method for reducing market volatility. Through the ups and downs of market cycles, it helps you average out your investment costs.

Every extra payment lowers your average cost and allows you to sell more units at the same price in a down market. This might have a significant impact on how things turn out. As per the data from the Association of Mutual Funds in India (AMFI) for the month of June 2023, investors continue to flock towards the SIP route for making investments as inflow through the category was at ₹14,734 crore.

Livemint spoke to Vinit Khandare, CEO & Founder, MyFundBazaar about the hidden facts about SIPs, and how they can impact investors' return. Your investment discipline may be put to the test during the early stages of a SIP. In this stage, the market's behavior is not as important to the investment outcome as your behavior in reaction to its whims will be.

There can be instances when the market will trend downward or sideways due to the volatility of stocks. A SIP is often an effective method. It assists in averaging out your investment costs over market cycles' ups and downs.

Every extra investment lowers your average cost and allows you to sell more units for the same money in a market. A SIP handles the majority of the labour-intensive tasks in a declining market. During this period, the rupee cost-averaging mechanism is in effect, bringing in additional units at a cheaper cost.

This positions you for better results when the market tides flip. The SIP investor recovers from a bad market considerably more quickly because of this approach. If you stick with the SIP through a protracted bear market, the market rebound that follows will