If you ask any financial advisor what the mantra is for long-term wealth creation, he would most likely recommend regular, disciplined savings in a carefully selected basket of investments that fits your risk profile. Without getting into jargon, this indicates that a structured investment plan (SIP) in a decent mutual fund or Peer to Peer investing can generate wealth over time.
What is SIP?
SIPs, sometimes referred to as systematic investment plans, are tools used by mutual fund and alternate investing firms all over the world to facilitate dividend payments and systematic investment management. SIPs are essentially a systematic method of putting money in investment. A fixed amount is invested on a regular basis through a SIP program. The amount to be invested is fixed and is usually withdrawn from the investor’s savings account.
SIP investments can be made on a weekly, monthly, or even annual basis. SIPs, as the name implies, are systematic plans that are simple to operate and suited for investors of all ages.
Why SIP is Best Way to Invest
- SIP Brings More Discipline To Your Investments And Savings
People frequently complain about their inability to save money. By using this SIP, you can invest at regular times throughout the month, which will be automatically deposited into savings before you spend your money.
It gradually but steadily instils financial discipline while also assisting in the realization of future benefits.
- Start With Small Amounts
Monexo Grow SIP allows you to begin investing with as little as INR 5,000 each month. By opting to invest in SIP plans, you can still benefit from the growth of the Indian stock market and alternate investing industry even if your earnings or savings are not extremely high.
Monexo’s SIP calculator will help you determine how much to invest to achieve your dream corpus.
- Don’t Stress About Timing The Market
One significant advantage of investing in SIP plans is that you do not have to worry about market timing and investing properly. You will receive less shares for the same price when the stock market is extraordinarily high, and vice versa.
As a consequence of the averaging, your portfolio will be well-balanced at the end of the day.
- Grab The Benefit Of Compounding
When you invest in a SIP, the monthly returns are reinvested in your investment amount until maturity.
As a result, your investment quantity is subjected to the impact of compounding throughout time, supporting you with exponential growth.
- Stop Anytime You Want
The majority of SIPs do not impose any penalties or fines if you decide to cancel the plan at any time. You simply need to go to your Demat account and opt out of the plan.
This is a benefit that traditional investments such as Fixed Deposits/Recurring Deposits do not offer.
- Skip If Funds Are Tight
For plenty of reasons, you may not have sufficient funds in your bank account to invest in SIPs. Don’t be concerned. SIPs allow you to skip a month without incurring any fees or penalties.
If you return later, you can continue investing as you did every month, unlike an RD or FD.
- Do Not Mix Investments And Emotions
Another crucial part of investing is to never let emotions influence your investment decisions.
Don’t make rash decisions based on current market conditions. SIPs make a significant influence in this area as well. You may avoid reacting to short-term market volatility by incorporating discipline into your investment strategy.
Conclusion
A systematic investing strategy might be a great addition to your portfolio. Aside from providing considerable returns, investing in a SIP improves your financial discipline. This discipline will also come in handy when making other investments. However, one must keep in mind that danger is unavoidable. SIPs, like other investment possibilities, contain risks. The trajectories of SIP investments are determined by market behavior. As a result, it is advisable to restrict your monthly SIP contributions in order to lower your risk exposure and the load on your monthly expenses.
