Among various theories of investing and building a financial portfolio, mutual funds play a significant role. For an outsider or someone who doesn’t know the market, the terms, the conditions, market fluctuations, and personal doubts can cause a lot of concern.
But with some research and support from a financial advisor, you can make the most of market volatility and increase your investments. SIP (Systematic Investment Planning) is one such tool that can help you in steadily building wealth over time. Systematic Investment Planning, as the term suggests, is a systematic process in which you invest a fixed amount of money once a fortnight or a month.
The following are some of the benefits of SIP, which helps you in making your dreams for a comfortable life, come true.
- Budget-friendly Investment
- When you already have enough expenses every month, you may not be able to invest large amounts at once. You can start investing as s minimum as Rs. 500/- per month through this plan. You have the right to fix the amount of investment.
- SIP gives you more control as you can easily set aside the amount you can save every month. When compared to investing Rs. 10,000/- at once, investing Rs. 1000/- per month seems like a feasible option.
- Early Investment
- You can start investing soon after you get a job. This gives you a lot of time to plan for the future and tide over market uncertainties. Long-term investments in SIP in mutual fundhave less risk associated with them because the lengthy duration balances the fluctuations in the market over a few years. Also, the sooner you invest, the higher will be the total returns.
- Disciplined Investment
- SIP in mutual fund is a structured and controlled investment plan. It becomes a part of your routine and brings financial disciple. You will get used to setting aside a fixed amount for the investment and plan your budget in the remaining amount. You will also start paying attention to the market and learn more in the process. It will make you financially aware so that you can make better decisions.
- Compounding and its Advantages
- Compounding is when you repeatedly add to an existing amount and increase the investment over a span. By the time theSIPplan ends, you will accumulate a decent amount plus returns you gain on the investment. When you start early, you invariably have the time to invest for a longer duration and get more returns.
- The Famous Rupee Cost Averaging
- Rupee cost averaging plays a major role in SIP in mutual fund. In easy words, when the NAV (Net Asset Value) of the investment is high, you will buy lesser units, and vice versa.
Securing the future of your family and providing them a comfortable life, now and later, are important and can be achieved through disciple and persistence possible with SIP online in mutual fund. Having a flexible investment portfolio also helps.