Client investor does not need to think much about investments. Every new customer in India thinks about SIP. In the words of the experts, SIP is the easiest option to accumulate wealth out of surplus. If you want to build wealth for your child’s higher education or even for a planned world tour or retirement, SIP is the solution.
What is SIP?
A Systematic Investment Plan (SIP) is a contemporary and effective way to economize and engage in a number of mutual fund transactions. It helps the investor by making it easier to invest over time by contributing a fixed amount on a regular basis, whether daily, weekly, monthly or quarterly, instead of contributing the amount at once. In this manner, high upper limits are eliminated since ‘smaller’ amounts are frequently invested.
How does it work?
1. Regular Contributions: You determine how much and how often you want to contribute (e.g., ₹500/month).
2. Mutual Fund Allocation: Each investment is utilized to buy units of a scheme, which are predetermined based on the NAV at that time.
3. Cost Averaging: Over the course of time, your investments are made when the value of assets is significantly below the market, and when the asset value is market or above, lowered a lot decreasing overall costs of investment (but in reality called rupee-cost averaging).
4. The fundamentals of compounding allow Returns that are reinvested to yield further returns, compounding over periods of time allowing for seamless growth in wealth.
Benefits of SIP Investment
1.Starts out cheap: A meager amount of 500 INR or 10$ will begin your investment journey
2. Investing With A Plan: A decided systematic investment strategy entails consistently saving or investing across a range of asset classes over a long period of time.
3. Time Risk Exposure is Reduced: This is the benefit of focusing on discipline in a set investment strategy over the actual timing of when to invest in the markets.
4. Stay invested for long and enjoy the benefits of compounding – Phalek trop agree
SIP is to be considered by whom?
SIP is suitable for:
Newer people that have never invested before and do not wish to take significant risk entering the market for the first time.
Employed persons who desire to acquire wealth over a period of time.
Investors having a horizon of five or more years for NRI and pension funds, for acquiring a home, settling children’s education or for comfortable retirement.