By now most of you must have heard this term a million times. What makes it so popular? Why is it important? Keep reading to know more.
What is SIP?
SIP stands for Systematic Investment Plan. It is a smart tool that allows you to invest a fixed amount of money in a mutual fund scheme on a regular basis. SIP helps you create wealth over a period of time and also helps you fulfill your financial goals.
You can start an SIP with as low as Rs.500 and maintain a disciplined approach towards managing your money. SIP offers benefits of rupee cost averaging and the power of compounding and helps you hedge your investment against inflation.
Why should you choose to SIP?
1. Power of compounding
Start investing early and regularly to enjoy potential returns on investment through the power of compounding. You can start with a small amount and enjoy a large corpus accumulated over a period of time.
2. Benefits of rupee cost averaging
Rupee cost averaging feature of SIP eliminates the need to time the market. You can get more units when the market is low and few units when the market is high. This averages the purchasing cost of your mutual funds.
3. Financial discipline
SIP imparts financial discipline to your life as it requires you to invest a fixed amount of money at regular intervals. This has plenty of benefits and will help not just you but your family in the future.
4. Market volatility
The best part about SIP is that you can invest a small amount anytime. You do not have to time the market or check its index level instead you can start planning and investing right away and let the money do the work for you.
5. Flexibility
SIP offers you the flexibility of choosing the intervals for investments like monthly, quarterly and half-yearly. You can even fix the date you want to invest. So, depending on your financial requirements and income, you can select a plan that fits your requirements.
Why is SIP important?
Simply put, SIP is a great way to fulfill your financial goals. Be it buying a house, luxury car, education or a foreign holiday, SIP will help you achieve it. With SIP, there are fewer risks owing to rupee cost averaging and you don’t have to time the market either. Also, SIP allows you to invest a small amount initially and increase it as your salary increases over the years.
Conclusion
SIP is a simple yet a powerful way to build wealth over time. You can start with a small amount and stay invested in it for a longer duration without worrying about the market fluctuations. So, start planning today and make way for a bright future!