Search Suggestions
- Gold Loan
- Money Transfer
- Mutual Funds
Top Reasons to Start a Mutual Fund SIP Before the Year Ends
For all those planning to invest in mutual funds, a systematic investment plan (SIP) proves to be a useful option. In an SIP, you do not have to make a lump sum investment but can pay a fixed amount of money over a period of time. SIPs offer a strategic approach for you to invest in mutual funds.
The most common SIP that people invest in is the monthly SIP whether they invest a pre-defined amount of money on a specific day of the month. This money is invested into a mutual fund of their choice. The amount of money to be paid monthly for a systematic investment plan is fixed but the Net Asset Value (NAV) of the mutual fund units varies day to day, so the SIP transaction purchases a varying number of units every time. The SIP investment interest rate also varies based on the market conditions.
Table of Content
Why SIPs Are the Top Choice for Both Novice and Seasoned Investors
The Investment Amount Is Small
You can get the best return on mutual fund investments with a very small amount. When you invest in an SIP, you can start with an amount as low as ₹ 100 per month. This offers a lot of flexibility, especially for younger professionals with low disposable incomes. Further, you can also increase your SIP investment gradually by opting for the step-up option. Step-up SIPs allow you to increase the amount you invest over a fixed interval by a certain percentage.
The SIP Can be Stopped or Skipped
It is possible for people who invest in mutual funds through SIPs to either discontinue or pause their SIP at any point. Most of the mutual fund schemes do not involve any penalties if you stop making systemic investments. This means that in situations where you may be short of funds, you can skip one or two SIP instalments.
Inculcates Discipline in Saving and Investing
It has often been seen that younger professionals struggle with saving, getting carried away with unnecessary spending, especially in the starting years of their careers. Starting a SIP helps cultivate healthy saving habits, helping them save a decent-sized corpus over time. Additionally, several investors who start investing may struggle with keeping the investing up for the long term. SIPs also bring in discipline to your investment journey as a small amount is automatically invested for you every month.
There Is No More Need for Timing the Market
Market timing is the suitable timing that is perfect for entering or exiting the market for the best return on mutual fund investments. An investor aims to make an entry when the markets are low and to sell off when the markets are high. In practice, this is not easy to do as the market is highly volatile and unpredictable. SIPs remove this issue and the need for timing the market, as irrespective of the market condition, a fixed amount of money is invested for you at regular intervals. This way, more mutual fund units are purchased when the markets are low and fewer are purchased when the markets are high. This balances out the effect that short-term fluctuations have on your investments.
The Average Cost of Mutual Fund Units Is Reduced
As mentioned, SIP investments offset the impact of short-term fluctuations on your investments. SIPs also help in reducing the average cost at which you purchase mutual fund units. The Net Asset Value (NAV) of the fund is lower when the markets are low and higher when the markets are high. So, in the long run, when a fixed amount of money is invested in mutual funds through SIPs, the average cost of the units also tends to be lower as compared to making lump sum investments when the markets are high.
Compounding Benefits
You can get compounding benefits when you invest in SIPs. They help you reinvest the return to generate more profits in time. This results in a compounding effect that increases your investments at an exponential rate. This results in your corpus growing significantly over time.
No Emotional Investing
It is not difficult for investors to get swayed by the ups and downs of the markets. The volatility and unpredictability of the market often lead to people making emotional investment decisions that more often than not fail to deliver the results that were expected. However, with SIPs, investors are protected from making such emotional mistakes as their investments are managed by fund managers.
Complete Transparency
The Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI) have a number of stringent measures in place that are applicable to all mutual fund schemes and which Asset Management Companies adhere to strictly. These regulations are applicable to the type of assets that funds can invest in, the structure of the fund, KYC requirements, etc. These rules have been devised with an aim to protect the interests of the investors and to ensure complete transparency, making SIPs the safest investment avenue.
Track Your Portfolio Online
Almost all Asset Management Companies in India offer their investors the ability to make investments and monitor them online. Additionally, there are several third-party brokerage sites and mobile apps that you can use to track your investments.
Unlike most investment avenues, SIPs offer a number of advantages, including better returns over the long run. You can always use a SIP mutual fund calculator to get an idea about the returns on your mutual fund investments through SIPs. You can enter the monthly investment amount, the SIP investment interest rate, and the time period and the mutual fund calculator will provide you with an estimate of the returns you can expect.
- Invest in Mutual Fund
- Systematic Investment Plan
- Mutual Fund Calculator
- Liquid Mutual Fund
- Debt Funds
- Balanced Funds
- Equity Linked Schemes
- Tax Saving Schemes
CATEGORIES
OUR SERVICES
-
Gold Loan
-
Gold Loan@Home
-
Housing Finance
-
Personal Loan
-
Insurance
-
Custom Offers
-
Money Transfer
-
NCD
-
Mutual Funds
-
PAN Card
-
Micro Finance
-
Digital & Cashless
-
Vehicle Loan
-
Corporate Loan
-
SME Loan
-
Milligram Rewards
-
#Kholiye Khushiyon Ki Tijori
-
NPS
-
#Big Business Loan
-
#Gold Loan Mela
-
#Gold Loan At Home
-
#Sunherisoch
RECENT POSTS
Types of SIP Explained: A Comprehensive Guide for Investors
Know MorePersonal Loan vs. Credit Card: Which Is Easier to Get Approved?
Know MoreUnderstanding How Health Insurance Works: A Complete Guide
Know MoreZero vs Negative CIBIL Score: What’s the Difference and Why It Matters?
Know MoreCIBIL Score vs. Credit Score - Are They the Same?
Know MoreSecured vs. Unsecured Personal Loans: Which is Right for You?
Know MoreWhat is a Health Insurance Premium: A Beginner's Guide
Know MoreHow to Make a Health Insurance Claim: Step-by-Step Process
Know MoreStep-by-Step Guide to Calculate EMI for a Personal Loan
Know MoreUnderstanding FOIR and Its Impact on Your Personal Loan Approval
Know MoreFIN SHORTS
What Is the Muthoot Mudra Loan Scheme
Know MoreWhat Is a Doorstep Gold Loan Service?
Know MoreWhat Documents Are Required to Get a Gold Loan?
Know MoreWhat Are the New Rules to Take a Gold Loan in India?
Know MoreWhat Are the Different Types of Mutual Funds?
Know MoreHow to Check Cibil Score?
Know MoreHow to Invest in Mutual Funds?
Know MoreHow to Buy Stocks in India?
Know MoreHow to Activate your UAN number?
Know MoreHow to Withdraw PF Amount?
Know MoreWhat Is The Process Of Gold Loan Auction?
Know MoreHow to apply Gold Loan Online?
Know More- South +91 99469 01212
- North 1800 313 1212