ns tax of 15%.
Let’s say you invest through a SIP for 12 months: January to December 2008. Now, in February 2009, you want to sell some units.
The system of first-in, first-out applies here. So, the amount you invest in January 2008 and the units you bought with that money will be regarded as the units you sell in February 2009. For tax purposes, the units that you sell first will be considered as the first units bought.
Conclusion:
The SIP reduces the average purchase cost, even in volatile stock markets with relative ease. When you invest a fixed amount every month, the number of mutual fund units you actually buy depends on their market price. Therefore, with the money you invest each month, you can buy fewer units when the market moves up and more units when the market moves down. This brings down and averages the price of purchase.
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