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Know your Stock SIP3 min read

December 30, 2022
know your stock sip with paytm money

Know your Stock SIP3 min read

SIP? In stocks? Isn’t SIP a feature in Mutual Fund investments? 

Well, yes. SIPs have long been a feature of Mutual Funds but, in itself, it’s just a plan. A Systematic Investment Plan to invest your money. Now, it may be in Mutual Funds or Stocks! 

Think of a Stock SIP as a DIY SIP because here, there is no fund manager involved unlike a Mutual Fund SIP.

To put it simply, a Stock SIP allows you to periodically invest small amounts in stocks instead of a large lump sum.

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But why Stock SIP?

Investing in stocks helps you own a part of the equity in any company and if these companies perform well over time, your investments grow as well. By investing through stock SIPs you will be able to bear market volatility and average out your cost over time (Rupee Cost Averaging). 

This is the most effective way to invest in equity, especially during volatile times. Stocks SIPs in the background function as scheduled delivery-buy-market orders. Your final investment is hence dependent on the market price of the stock at a given time. Read more on SIPs in Stocks, ETFs – How to Start SIP & Benefits of Investment

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How do Stock SIPs work?

Stock SIPs help you to accumulate shares of any company over the long term. At Paytm Money, the focus is on the execution of the SIP order rather than timing the market, thus all the SIP orders are placed as market orders in exchanges to ensure they are executed.

SIP orders are placed in two batches – the first batch at 10:30 AM and the second at 2:30 PM on market days. If your scheduled date falls on a holiday, your SIP order will be sent to the exchange on the next trading day.

How does price fluctuation impact the execution price of the stock?

Let’s assume you start an SIP of any stock with a price of ₹1500 at the time of SIP setup. Later, during SIP execution, if the stock price is  ₹1400, you’ll get the stock at ₹1400.

Conversely, suppose the price of the stock during the SIP execution is  ₹1550. In this case, you’ll get the stock at  ₹1550.

Hence, the quantity is fixed but the SIP amount varies per the stock price movement.

Why are additional funds added while making payment for an SIP?

To ensure that your SIP orders are executed successfully, additional funds (3% buffer over and above the stock price) are added to your trading balance. This is to handle any price fluctuations that might happen between the period when payment is done till the time the stock SIP order is traded.

Conclusion

We are continuously working to make the Paytm Money app the go-to platform for every Indian when it comes to wealth management. With the Stock SIP feature for stocks and ETFs, we have taken yet another step in that direction. We hope you make use of this innovative new feature and build wealth.

Disclaimer – Investment in the securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Representations, if any,  are not indicative of future results.

Paytm Money Ltd SEBI Reg No. Broking – INZ000240532. NSE (90165), BSE(6707) Regd Office: 136, 1st Floor, Devika Tower, Nehru Place, Delhi – 110019. For complete Terms & Conditions and Disclaimers visit https://www.paytmmoney.com/policies/terms