A Systematic Investing Plan (SIP) in a mutual fund scheme is the answer to preventing the pitfalls of equity investment and still enjoying high returns.
Disciplined investing: For any investor, discipline is crucial to ensure investing success. Through an SIP, an investor can choose to invest fixed amounts in a mutual fund scheme, which could be as low as Rs 500 at regular intervals, such as every month for a chosen period (say, for a year).
The amount an investor invests every month or every quarter will be used to purchase units of a SIP of a mutual fund scheme. Small amounts set aside every month towards well-performing SIP mutual fund schemes can help an investor achieve their respective financial goals in the future.
Here’s a look at a few of the benefits that an investor can expect by opting for the SIP facility in mutual funds:
Invest in instruments that beat inflation: Equity investing can help an investor combat rising inflation that diminishes the value of savings.
SIP over a longer period can reduce the cost per unit: An investment of Rs 24,000 in a mutual fund resulted in a value of Rs 25,200 after 12 months, whereas a SIP mutual fund investment of Rs 2,000 per month can grow up to Rs 27,095 after the same period.
Fewer efforts to opt for SIP: The procedure to invest through SIP is quite easy. All one needs to do is give post-dated cheques or opt for an auto-debit facility of a specific amount towards SIP from a bank account. SIP plans are completely flexible. One can invest for a minimum of six months or a long tenure.
Also, an investor has the option of choosing the investment interval; this could be monthly or quarterly.
In the case of a rank beginner, it is suggested to seek advice from a professional financial advisor before starting the SIP facility in a mutual funds scheme.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.
