You might have heard the term Systematic Investment Plan (SIP) have you? Many people are crazy about investing in this concept. However, there are many who does not even know what is it and how beneficial it would be to invest in it.
What is SIP?
An SIP is a particular amount and it is invested for a continuous period at regular intervals. This is quite similar to a regular saving scheme like that of a recurring deposit. Sip allows the investor to purchase the units as per a pre decided frequency. It means the investortakes the decision regarding the amount and also the scheme / scrip he or she wants to invest in.Becauseof the principle of cost averaging, much number of units ispurchased in a falling market and less units in an increasing market. It also allows you to take part in the stock market that too without trying to time it. It is something that evenbringsdiscipline to your investments.
What are the advantages of an SIP?
What do you think: Is investing in sip a good idea? Well, it is a question that is churning many minds. Well, maximum people feel that it is a fantastic idea. You know systematic investment plan is a way to form an investment portfolio having a small sip investment in mutual funds at steady intervals. Many investors pick this route to step in the financial markets and take advantage from compounding returns the finest way. As of now, you can yourself read some of the many advantages of sip below and make your decision accordingly.
For any type of successful investment, discipline is essence. When you do investing via SIP, you commit to save frequently, and every single investment takes you a step nearer to reach your financial objectives.
There is Convenience
Investing via SIPs is a hassle-free procedure. You can easily instruct your bank to facilitate auto-debits from the account you have. You can even visit the website of the fund house you have interest in and click or tap on the link for SIP registration link or button.
Rupee cost averaging
In case you choose to invest a fixed amount of money every single month via SIPs, you are going to witness that more units or stocks get purchased when the cost of the investment goes down. Itbrings down the average price of buying the financial asset overtime.
Advantages of compounding
To produce wealth, the key is to begin to invest early and regularly. A tiny sum of money invested through SIPs on a regular basis can increase into a significantly large sum. Via the power of compounding, your interest gets you interest and it allows you to fetch a considerable amount of wealth.
No requirement to time the market
To know when the right time is to do investment in the market can pose a huge dilemma. It is tough to predict when the market is going to be at its peak or low point. Investing via SIPs keeps the investors from timing the market. While SIPs are not totally free from the market volatility, you need not to panic or worry about the market movements.
So, if you haven’t thought about SIP yet, it is time that you do so.