Systematic investment plan commonly known as SIP is a tool for making smart investments. It is a systematic investment plan that one makes to manage their finances and multiply it in the coming years. It is not a product but a strategy to organise the funds that help in smart investment. It majorly helps you invest in equity mutual funds that are otherwise high in price.
When you plan an investment through SIP, a fixed amount that you have decided is put to use regularly in the mutual fund scheme you choose to invest in.
Benefits of SIP
1 Financial planning
This plan helps you plan your finances and investments to bear the fruits later. You know that a fixed amount will be deducted that might be botheration but it is a kind of saving for future.
2 Financial security
What you save now will be three times capital returns in the near future. These plans make you feel secure and prepare you for future.
3 More of market research and learning
Make smart timely investments need a thorough knowledge of the market, as a result, making you active about the market dynamism. What is high on demand, what is the position of your share in the market, therefore, it makes you well aware of the market and enhances research ability.
4 Capitalise more
Since you learn a lot about the market, your practice helps you invest minimum and capitalise more, thus getting higher returns. Not only that, when you multiply your returns so high that your returns fetch you higher returns, the capital gains know no bounds.
5 Lowest possible investing amount
There is no minimum amount required for investing in a mutual fund scheme, as low as 500 is enough.
6 You can customise
You can decide on how often you want your investment amount to be deducted. It can be monthly, bi-monthly or quarterly. You can customise it as per your planning. You can also customise the amount. You can increase your amount after a certain period.
Read More: How Best to Start an SIP
What is SIP Stands for?
Systematic investment can be for various purposes. It can be to multiply finances. Some individuals are smart enough to increase their income manifolds by investing in the market or any mutual fund scheme that helps in making them rich by multiplying their investment amount, therefore, resulting in capital gains.
It can be to secure your child’s future. Some people start making small investments for a long period of time in order to help their child in the future with higher returns of the small investment made a long time back.
Some people invest at a young age to secure their future when they grow old. Since they realise that no one will ultimately be with them or there will be financial insecurity, they save for their future.
Systematic investment plans are a smart way of investing and securing yourself financially. It shouldn’t be an effort wasted without a vision and a better understanding. Investment should be wise to get you better returns that will help you in the future. Be your financial planner, make wise investments.