Investing in the equity market can be nerve-wracking. With every up and down fluctuation in the market, the investor is left even more stressed out and anxious than ever. It is nearly impossible for an investor not to be affected by the short-term fluctuations in the market.
Recently, a fund house announced that their equity funds had grown 100 times in the last 20 years. But not more than 10% of the initial investors stuck through for the whole period.
It is easy to miss out on opportunities like these when you don’t have the right expertise or time to handle the equity market. So, what would be an excellent way to take advantage of the gold mine like the equity market and still not fall prey to the pressure of the market itself? There is only one answer to that question: Systematic Investment Plan or popularly known as SIP.
As the name suggests, SIP is an investment strategy that prescribes investing in a fixed amount in regular intervals. The investment could be weekly, monthly or quarterly. This amount is automatically deducted from your bank account as per the plan, hence making it more efficient compared to other investment plans. Most expert investors would suggest starting with SIPs. There are two reasons behind this:
- SIPs are less exhaustive on your wallets,
- SIPs are the best option to cultivate the habit of investing.
You don’t need to be an expert on the mechanisms of the financial market since the fund house through whom you invest will be handling your portfolio. Even though the final decision making lies in your hands, on whether to stop the investment or continue it, the nitty gritty details will be taken care of by the fund house. The fund house will even select the most suitable funds for you according to your risk tolerance and investment goals.
In short, SIPs are the smartest and the most efficient method to starting point in your journey into the equity market. It is your safest bet at `learning the inner workings of the market and not succumb to the pressure of short-term fluctuations.