No tags yet.
It is well known to everyone that ‘little drops of water make the mighty ocean.’ Do you know the same phrase has a pivotal role in the mutual fund investments as well? Yes, SIP, i.e., Systematic Investment Plan is the mode of investing in mutual funds which is intended to serve the same motive of filling the mighty ocean of wealth. If you opt for the same, you can easily attain your investment objectives and earn tremendous returns to create a corpus in the future. Before going further to understand the benefits of SIP plans, let’s grab its meaning first.
Systematic Investment Plan (SIP) is nothing but investing a small amount of money on a preset date every month in a specific mutual fund plan. It is considered to be the best way of entering into the equity market as it brings investment discipline in the investor. The SIPs are very helpful in achieving the desired goals in life through a small investment which eventually leads to accumulating a huge wealth to fulfil the goals. There are investors who are afraid of opting for the PPF or insurance plans due to various reasons, for them, the SIP investments are the perfect solution. This is because of the following reasons:
These plans are focused on the open-ended funds where the investors can invest and take out the money anytime.
There is no fixed tenure for running the SIP plans. In fact, if a tenor is fixed, it can be stopped anytime as per the requirement of the investors.
One can withdraw the funds either fully or partly during or after the SIPs, and the amount can also be increased or decreased anytime.
One does not lose the liquidity as the investments are highly flexible and can be withdrawn anytime.
Although the SIP is flexible enough, going for a short-term plan wouldn’t help anyone to gain its advantage. To reap the extraordinary benefits of the funds, it is a must to have a long-tern investment horizon as longer the tenure; high would be wealth accumulation.
Advantages of Systematic Investment Plan
Rupee-Cost Averaging - It is a common phenomenon among all while buying a commodity, buy at low prices and sell at high. But in the case of equities, we do exactly the opposite. The reason behind this is our emotional attitude toward our monies. When the market falls, we become afraid of losing our hard-earned money and forget the general rule. We believe that the fall will continue longer, and sell off our holdings even at losses. Do you think it is right? Of course not! Patience is the key to success in mutual funds.
The rupee-cost averaging helps in reducing the overall cost of investing. In SIPs, the investor buys the units of mutual funds every month at a different NAV every time. Accordingly, s(he) ends up buying more number of units when the market falls, and less when the market goes up. This ultimately leads to accumulating a higher number of units in the portfolio when compared with other ways of investing than SIP.
The Power of Compounding - Under this, the investors gain the benefit of earning ‘interest on interest.' By making SIPs, one earns accumulated returns on the investments which is further reinvested in order to build wealth over time. It has been observed by the experts in the industry that the investments in mutual funds have earned tremendous growth at compounded rates and generated wealth for the investors in the past.
This way, the SIP plans in India can lead one’s investment toward high yields, and help one in attaining the financial goals with ease. You can begin investing in mutual funds online through SIPs by availing the online services of various platforms. MySIPonline provides assistance to the investors in buying the best SIP plans in India with perfect investing solutions. You must get associated with them to make your financial dreams come true.