Afraid of market volatility? Invest in a systematic action plan to balance risks


While subscribing to mutual funds through the Systematic Investment Plan (SIP) has now become a common method, what is unusual is investing in stocks through the SIP.

Investing in the stock markets is something that every investor wants but is afraid of losing money due to the volatility of the markets. For these investors, the Systematic Equity Plan or SIP in stock is a savior.

Equity SIP or SEP is similar to mutual fund SIP. In the way of mutual funds, you invest a limited amount of money in each period that is used to buy the mutual fund units on the day of execution.

Likewise, when you SIP on the stock market, you have the option of either investing a specific amount each time, or the option of buying a fixed number of shares on the trigger date.

An equity SIP requires the ability to fully understand the nature of a business and then assess the nature of the balance sheet. A futuristic vision of how a business would behave in the future is crucial.

According to TheWeathWisher, SIP in stocks is for those who seek active management of money in stocks and want to be disciplined in their investments.

Unlike SIP in mutual funds, SEP is calculated based on XIRR or Extended Internal Rate of Return, which is a measure of return used when multiple investments (at different times) are made in a financial instrument.

Explaining the process with an example, MyInvestmentIdeas said, for example, that you are opting for Rs 5,000 per month in Bharti Airtel shares and about the company share price is Rs 300 per share.

Now either you can buy 16 shares (5,000 Rs / 300 Rs per share), which will cost you around 4,800 Rs and respect your fixed amount. Or, you can also opt to buy 16 shares directly regardless of the price.

How to create SEP?

SEP or SIP in stocks can be created with just a few clicks.

1. Create or log in to your brokerage account
2. Create SEP for any selected stock
3. Select your option: fixed amount or fixed amount
4. Select the date on which the SEP should be executed.

You can also create multiple SEPs for your account actions. Depending on your needs, the shares will be credited to your account at T +2 days as a normal share purchase transaction.


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