Many investors now take the SIP (Systematic Investment Plan) route to begin their savings and take advantage of compounding returns in a best way. As SIP is considered as the most convenient way of investing in the equity markets, Financial Advisors suggest investors to opt for it. SIPs are generally advised to investors who look to invest a certain sum of money in mutual funds at regular intervals to build corpus for meeting any long term financial goals.
SIP allows investor to choose the mode of investment as per their convenience- monthly, quarterly or annually, for investing in funds of their choice. Investors can choose from various investment vehicles to invest their money including stocks, mutual funds, ETFs, etc.
SIP brings about a discipline in terms of investment habits. It helps the investor in maintaining a focused and dedicated approach towards investment. Starting with an amount as low as Rs.500-Rs.1000 per month, SIP offers a number benefits that make investment quite comfortable and enjoyable experience.
As said above, SIPs are the best way to build a corpus, here let us glance as to why must one do so:
It is light on your wallet. Since you can begin with amount as low as Rs.500, you can easily manage your investments and other expenses efficiently
There is no much effort. A certain amount gets auto-debited from your account and invested into a specific mutual fund scheme
The investment remains the same only the number of units bought/sold fluctuates as per prevailing market conditions
More number of units can be purchased in a declining market and less number of units in a rising market
Once an investor opts for SIP option, he/she automatically participates in the market swings
SIP has been proved to be the most ideal way of investing for retail investors who do not have the resources to pursue active investments