Several investors have been quite anxious due to the excess volatility in the stock markets in the past few months. This is where SIP comes into play. SIP or Systematic Investment Plans helps to beat market fluctuations. The benefits of SIP are not limited to this. This article focuses on the benefits offered by SIP investments. But, let’s quickly recall what is SIP.
What Is SIP?
SIP is a disciplined and systematic approach to invest your money in mutual funds. Under SIP mode of investment, regular and fixed investments are made towards the desired investment option for a fixed period of time at regular intervals. Due to its nature of regular investments, SIPs are ideal for salaried individuals or someone who can regularly invest in mutual funds.
What Are The Benefits Of Putting Your Money Into An SIP?
There are several benefits of investing in mutual funds via SIP mode of investment. Let’s understand these advantages that can help you make an informed investment decision:
1. Antidote To Market Volatility
As mentioned above SIPs help to beat market volatility. This allows investors to benefit from any future falls that the SIP mutual fund might face while also providing a better margin of safety.
2. Discplined Way Of Investing
As regular investments are made towards desired mutual fund schemes under SIP investments, it indoctrinates a sense of financial discipline among its investors. Investing discipline is necessary to invest in stock markets.
3. Rupee Cost Averaging
Another effect of regular investing is that it ensures that you stay invested in the markets during different phases or cycles of the market – bullish market cycle and bearish market cycle. As a result, you would end up buying more mutual funds during a market slump than when the market is as its peak and vice versa. This strategy is popular called as rupee cost averaging.
4. Power Of Compounding
Another benefit of SIP investment is the power of compounding it offers to investors. Compounding helps to grow your money at an exponential rate. The basic idea behind compounding is that your returns are re-invested to earn further returns on your investments.
5. Very Convenient
SIP investments are quite convenient. Depending on your needs you can choose the SIP that best serve you. You can increase or decrease your SIP investment, or you can invest in SIP till you die, or you can even pause or stop your SIP investments according to your convenience.
6. No Upper Limit
There is no upper limit to invest in mutual funds via SIP. You can invest whatever amount deems fit for your financial portfolio. What’s else, you can also invest am monthly sum of just Rs 100 in mutual funds through SIP mode of investment.
7. No Need To Time The Markets
One of the biggest benefits of SIP investments is that it takes out the need to time the markets. Instead, SIP investments focus on the approach of time in the markets – it encourages investors to stay invested for a long time.
Innovative Investing
There are several benefits to investing your money in a systematic and disciplined way. Open the doors of SIP in your life and allow them to serve your financial goals in a disciplined way. Happy investing!
