Different Reasons to Start SIP for First-Time InvestorsComments Share
Are you planning to save money? Are you looking to accumulate some amount to fulfill your financial dreams? Are you looking to get some amount saved in case of any contingencies? Are you planning your retirement?
If the answer to any or all of the above question is YES, then you are at the right place. You can do all that by start investing in Mutual Funds through SIPs.
SIP or Systematic Investment Plan is a way to invest your money in the Mutual Funds in the form of a fixed amount in a fixed period of intervals.
You can start investing in Mutual Funds with a SIP amount as low as Rs. 500 per month. Read below to know how SIP is beneficial for you.
To achieve your long-term financial goals
Everyone has something planned for their future whether it is buying a house, children’s education, or retirement, etc.
These things involve a huge amount of money and it is pretty difficult to have that much amount with you at once in a lump sum.
However, with small but regular investments through a Systematic Investment Plan you can accumulate a hefty amount of wealth which can be utilized in achieving your financial goals.
To simply develop a habit of saving
These days, people start earning at a comparatively younger age as compared to what it was a decade back. With the rising inflation, it is high time for the youngsters to start developing a sense of saving so that they can achieve their dreams and never feel short of finances.
The best way to develop a habit of saving is by investing in SIPs. This is will not only help you save regularly but the corpus that will be accumulated over time will be rewarding. Also, you can withdraw the amount from SIP anytime, whenever you want it, so there is no blockage of your saving as it happens in RDs or FDs.
To meet the contingent expenses
In modern times, we never know when urgency can arrive where we need a huge amount of money. To meet such urgencies and contingent liabilities it is necessary to save your income.
Though it is impossible to save a huge amount directly, saving and investing a small amount over a period of time will be helpful to accumulate a sufficient amount to meet any unexpected expenses.
The benefit of SIP is that you can withdraw the amount in full or partial at any point of time without any loss of your return on investment.
To create wealth from your income
Incomes aren’t supposed to be just earning that meet our day-to-day expenses. Now with your current income, you can actually create wealth to secure your future.
Investing in SIP lets you enjoy the power of compounding which simply means that your interest earned is invested again to earn more interest, resulting in an exponential growth to your return on investment.
For example, if you start investing Rs. 1000 every month in an equity fund through SIP to meet a certain goal that is 10 years away, you would get Rs. 2,32,339 at the end of 10 years with an assumed rate of return as 12%.
However, if you invest Rs. 1500 for the same goal but just before 5 years, you would only get Rs. 1,23,729 as return after 5 years.
Thus, you can see that with the power of compounding that SIP holds, you can create wealth from your income in the long run.
To remain unaffected from the ups and downs of the market
It is a well-known fact that Mutual Funds are subjected to market risk. However, if you invest in them through SIP you can get the benefit of Rupee Cost Averaging.
Usually, it happens that we tend to avoid purchasing equity during the downfall of the market, but with SIP more units are purchased when the price is low and lesser units at a higher price. Hence, your investments remain protected from the market volatility and stay at best of its health.
To meet short term financial goals
SIPs do not have any lock-in period, which means you can take out your money at any point in time. This is helpful in meeting short-term financial goals.
You can invest amount as per your convenience (if you have a surplus amount you can have more than one SIPs) and you can withdraw or stop as per your requirements.
This makes investment easy and hassle-free, giving you hold of your own investments.
These are not the only benefits that a SIP has for you. There are different types of SIPs with different types of benefits, but now you know that you can invest a minimum of Rs. 500 in Mutual Funds through SIP to reap these benefits based on your objective of the investment and what you want to get from it.
You can visit our website to know more about Mutual Funds and SIPs and also to start investing seamlessly and paperless.