Mutual FundPersonal Development

SIP, Maker or A Breaker: Overview of investment

Are you planning to invest in mutual funds or start with SIP? Are you confused about whether to invest or not? The increase in the share market of the investors is potentially Rising, and if you compare the past 5 years’ data, the number has increased a lot. In addition, the systematic investment plan (SIP) has been an extremely popular and efficient strategy for the investor to invest in for the long or short term. We discuss the SIP and how efficiently you can invest in mutual funds.

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Let us start with the very basic term that you should understand: systematic investment plan; what it is? Do you know, or is it just a misconception, or have you read somewhere about the SIP.

What is SIP?

A systematic investment plan is a two-way thing in which you can invest in a mutual fund. The other way is to invest in a lump sum amount.

In SIP, you can only invest a fixed amount at your convenience on a particular date. Every mutual fund has its minimum investment amount that should be adhered to.

Systematic Investment plan calculators will help you understand that the SIP is suitable for your investment options and objectives. 

What are the benefits of a systematic investment plan?

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  • A Discipline Investment Technique

People complain about many things like they cannot save money, where to save money, and how to save money. This, as per the SIP route, is for those who were to save money and regularly invest at regular intervals of time every month.

It will automatically translate into savings before you spend your money. Slowly but steadily, it wins financial discipline and helps realize the returns later.

  • Small is Enough

People don’t need a huge amount to start their plan. You can even start investing with as little as Rs 500 a month. But, on the other hand, if your earnings are not very high and you have to save money, you can take advantage of the SIP route.

So take advantage and be a part of the Indian stock market by investing in any Mutual Fund with the SIP route.

  • Don’t Stress about timing the market.

One of the greatest advantages that I’ve found is that today people are more stressed about earning and saving. With SIP, they do not stress time, market, and investment.

In the stock market, it is extremely high with the same amount. So, averaging works and your portfolio will be balanced at the end of the year.

  • The Compounding Technique

When you invest in SIP, the return from SIP will be reinterested in your investment amount until the maturity period. Your investment amount is exposed to impact the compounding and helps you in the real and exponential growth.

  • You can take a break.

The majority of the SIP does not charge anything if you want to stop the plan at any time. You just have to opt out of the plan from your Demat account. It is one of the greatest advantages traditional investment doesn’t give you.

  • Skip if funds are right

Sometimes for various reasons, you might not have enough funds in your bank that can be used for investing in SIP. But you don’t have to worry about it; you can just give up and proceed further whenever you want to.

SIP allows you to skip a month without any fees or charges. You can come back later and keep investing as you do every month.

Investments & Emotions

Another important aspect of an investment is never letting your emotions take away your money. The stock market by many principles fluctuates continuously. Do not make any decision based on the point performance of the market.

There is another area where disciples make a lot of difference, but there should be a discipline in the investment approach where you can help yourself and not react to the market’s short-term volatility.

A systematic investment plan helps you grow and save money for your plans. It acts as a Shield to you from many homes.

They are short-term risk, short-term volatility, emotional and impulsive reaction, overspending, and solving.

SIP plans are the safest and the most convenient way to invest in the equity market through mutual funds. You just have to learn a bit about where to invest.

Frequently Asked Questions 

How to start a SIP?

One can start a SIP online directly through an AMC or offline through a mutual fund distributor or agent.

Are there any conditions to start SIP insured?

Yes, the AMC imposes a few conditions for those looking to become SIP insured. However, the conditions may vary amongst different companies. For example, the conditions may include terms like minimum investment period, the maximum number of defaults allowed, the redemption of units, etc.

Is it safe to invest?

It is a safe method to invest in mutual funds. However, if you want to invest a lump sum amount depending upon the market condition, you could end up paying a higher price for mutual funds.

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