Here’s Why SIPs Are A Great Idea!
August 9, 2021
We’re all taught how to dream big from day one. Be it your dream house, owning that Porsche or going on that bucket-list trip, we’ve been encouraged to aspire.
While everyone teaches us to dream big, no one shows us HOW to reach these goals.
On some days, we’re confident of ourselves and our dreams. On other days, we feel like we’re working hard for nothing. How does one stay motivated?
Here’s some food for thought : If investing was taught to us as a subject in school, can you imagine how revolutionary the economy would have been, with individuals who were confident of their money management skills?
Aspects like how to have an analytical mindset, how to take calculated risks, how to invest the right way, what are the financial risks involved, how to have more than one stream of income, how to calculate risks v/s returns and more, would have transformed us from individuals to successful investors, do you agree?
At a time like this when we’re left feeling overwhelmed and confused, what we need is an investment strategy that will see us through on a rainy day. Speaking of which, have you considered SIPs?
What are SIPs? How can they help you achieve your goals? How can they help you stay financially independent? Here’s a quick 101:
What are SIPs?
A systematic Investment Plan is an investment tool through which you can invest in Mutual Funds. While in several other investment tools, the individual has to pay a large sum of money at once, SIPs use a systematic method of investing a fixed sum of money over a period of time.
The time of investment could be monthly, quarterly, semi-annually etc.
This gives us the advantage of making many deposits over time without the burden of investing a lump sum at once.
What are the benefits of investing in SIPs?
When you invest in a SIP, you can enjoy a compounding return on your investments. It has substantial practical implications as and when an individual invests in SIPs regularly, the returns they have earned also gets reinvested. Over time this creates a snowball effect which helps an individual get more returns from the investment over a long time. In essence, if you begin investing in SIPs at a young age, the more benefits you can enjoy!
2. Low initial investment.
Through SIPs, you can invest in Mutual Funds with a monthly cost as low as ₹500, making it very affordable while not hampering daily needs. You could also increase the amount of investment if you have a raise in income. Meaning you can start with an amount as low as ₹500 – ₹1000 and then gradually increase the amount of investment through which you can reach your dreams at a faster rate.
3. SIPs are super convenient.
So many of us do not have the time, knowledge and tools required to study the market and do extensive market research. You will have to choose a good fund and let the platform you’ve chosen do its job of automating the payments. It will save a lot of time and effort, making it more convenient.
4. Rupee cost averaging.
When you invest in a SIP, the funds are purchased according to the market rates. It means that you can buy fewer units of the fund when the market is high and buy more units of the fund when the market is low, averaging the cost of the units in the long run. This makes investing steady and helps keep your investment away from market volatility.
Simple tools like SIPs are helping people invest small funds over a long period of time, taking it easy on their bank balances while turning dreams into reality. SIPs will definitely help you achieve your goals making it suitable for your investment needs.
Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme related documents carefully.