Aim to achieve financial discipline with SIP

It is important to have a financial goal in your mind. You need to follow a systematic approach. Systematic Investment Plan or SIP is a way in investing in mutual funds in a systematic way so that you can achieve your financial goals. In SIP investments your funds will be directed in equity and debt schemes. SIP helps you invest on a regular basis so that you can generate income in the long run.

Benefits of investing through SIP:

• Option to invest small amounts:

  SIP does not out any burden on you. You can invest small amounts on a regular basis. You can make daily, weekly or monthly investments depending on the amount of money that you have. It is possible to invest as low as Rs 500 in these type of investments.

• Market timing not important:

  Markets can be volatile, but SIP’s are a great way to manage the market volatility as well. In the long run you will find that equities are much better as compared to even gold and real estate. The only important thing is that you need to select the right mutual fund and your timing of investment has to be right. The investor needs to invest for a long time. This will help in managing the market volatility with ease.

• The rupee cost averaging aspect:

  With SIP you get the rupee cost averaging advantage. When the prices are low you can buy more number of mutual fund units. When the prices are high you can buy less mutual fund units. With SIP you can reduce the average cost of your investments.

• The compounding advantage:

  With SIP the investor is investing on a regular basis. The investor gets the advantage of compounding. The wealth will multiply and that too in a systematic way. Now this is something that might not be possible if you were to invest a huge amount in one go.

• Helps in goal planning:

  Short term gains are not going to help you. You need to have long term goals. All of us have financial goals and if we want to achieve these goals then we need to make planning in a systematic way. SIP’s can be one of the best ways of achieving this. Many investors ask the question when to start investing? The answer is simple. You always need to start as early as possible. This will make it much easier for you to achieve your financial goals. .

Some myths about SIP’s:

• Many people feel that SIP is only for small investors. This is not true! All those who want to invest regularly and create wealth can invest in it.
• People feel that SIP mutual funds and lump sum mutual funds are two different things. This is not true. SIP refers to only a way of investing.
• People also have this myth that they cannot make lump sum investments in a scheme where they have an SIP account.
• Investors feel that they will get penalised if they miss SIP dates. This again is not true.

Enhance the effectiveness of your financial planning with SIPs!