SIP, an acronym for Systematic Investment Plan, is the talk of the town in the stock market. From newspapers to drive-in hoardings, friends or family, everyone speaks about SIP & its generous benefits.
SIP acts as a stepping stone to embark on their trading journey, especially for youngsters or individuals who want to enter the stock market. So let's learn more about SIP.
What is a SIP & Why is it Famous?
SIPs Starts with INR 34/day
Right! SIP is lighter on your wallet. You do not need a lot of money to start SIP. You can start with a bit of INR 1000/month (INR 34 per day), or in some cases, INR 500 (depending upon the mutual fund schemes).
After you receive your paycheck, calculate your monthly requirement. Accordingly, set aside what you need for routine and basic expenses. Then, after doing your math, ascertain the amount you can invest in SIP regularly. This way, you won't suppress your leisure and support your long-term goals simultaneously.
SIPs are Flexible
From softies to blueberry cheesecakes, you can choose any dessert to lighten your mood. Likewise, SIPs provides you with the flexibility to:
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- select your investment amount,
- choose the number of months you want to invest,
- date of starting your SIP, and
- discontinue at your convenience.
You can pause your SIP for a particular period if you have other plans. Also, you can upgrade your SIPs to a more extensive installment, depending upon your income scale.
SIPs Teaches Investing Discipline
SIP helps you teach the investing discipline. Irrespective of the market scenario, you need to invest a certain amount in SIP for a regular interval. This way, you are learning to manage your present and future finances.
With your SIPs on autopilot, you rest assured that your money is safe. No fear or greed can overrule your decisions, and you always move one step forward towards your financial goals.
SIPs Average Out Investment Costs
Mutual Funds are subject to market risk. Read all documents carefully........
We are sure you have come across these lines after every ad-related to mutual funds. But, of course, a market is volatile, but not for individuals who invest in SIPs.
By regularly investing through SIP, you can average out the cost of investing, purchasing more units when your trades' Net Asset Value (NAV) is low & fewer units when the NAV is high. This process is renowned as rupee cost averaging.
Hence, SIP helps you minimize risks & plays safe in the fluctuating market.
SIPs Aids Grow Your Money by Compounding
Compound Interest; the terms that date back when we were in school!
Yes, reinvesting your principal & interest amounts you earned with fixed interest is known as compound interest.
A fixed amount gets invested in the mutual funds when we start SIP. However, suppose you regularly invest your money for a more extended period. In that case, you may profit from the compounding as you will earn interest on the principal amount, plus the interest amount you reinvested during that period.
This way, you have an opportunity to multiply your returns, even at higher rates.
SIP Variants Provides More Investing Power (Especially to Seasoned Investors)
Seasoned investors are traders who have many years of experience in trading & the secondary market. Like Flexi-SIPs & Step-Up SIPs, SIP variants gives excellent opportunities to such traders.
Let's take a scenario where a working professional is promoted in his company incrementally. Hence, along with his income, he will proportionately increase his expenses, savings, and investing amount.
If he is a seasoned trader and holds a Step-Up SIP, he can increase his SIP amount and earn good returns. On the other hand, if he has a Flexi-SIP, he can increase or decrease his SIP amount, depending upon his interest.
SIPs are fascinating when done Systematically!
SIP is a new and promising way to begin your investing journey in mutual funds. Consider SIP as your piggybank & start saving regularly. The only difference is, SIP will help you grow money with efficient interest rates.
Start Your SIP Today!
