So, what do you interpret by the term SYSTEMATIC INVESTMENT PLANNING? (SIP)
Philosophically, just as little drops of water helps to form an ocean, in a very similar manner, SIP is that technique which helps you to invest money in small amounts which leads to forming a huge corpus gradually.
How does an SIP work and how will it benefit you in the long run?
- If you are asked to let out Rs 75000 from your pocket monthly, you would be hesitant, but for the same target if you would be asked to let out Rs 5000 monthly, you would find that easier to opt.
That’s exactly how SIP works!
- SIP works on the basic principle of investing money in short periods over a term to achieve your financial goals. You may not have an entire lumpsum to invest, therefore in such situations SIP works the best as you are able to invest smaller amounts and increase them gradually over a period of time.
- SIP mode can be chosen according to your needs and wants, whether you want it monthly, quarterly or even on a fortnight basis. Also, you can start or stop your SIP whenever you feel like. So, it’s quite flexible that way!
- SIP offers a wide range of benefits to all. It specially will cater to you if you are a monthly salaried person who is used to spending up all the money you get and save what is left. SIP tends to instil an investing discipline in you from the scratch.
- It proves to be more useful when the stock market is trending upwards. Choosing the SIP route reduces the volatility, since you are investing every month any dips in the market will help to gather additional units. You end up having more money than you would have, if you had tried investing in one shot.
- It’s a hassle free method of investing as a very meagre amount gets deducted every month from your account.
- Rupee Cost Averaging is another advantage you get out of SIP. It implies that you buy less amount of mutual fund units at a high price and a great number of mutual fund units at a low price which auto balances and generates regular returns.
Imbibe the principle of SIP investing in your life and generate large returns in short periods!