Systematic Investment Plans or SIPs are basically schemes for investments which are given by firms dealing in mutual funds. These plans help you invest smaller amounts on a quarterly, weekly or even monthly basis towards building up a corpus for the future. SIP promises a well-disciplined and passive approach to retail investors to create wealth in long term (using the power of compounding). Since you can easily invest smaller amounts regularly, it also lowers the overall effect on your investment due to market circumstances and any volatility. The following are the benefits of SIP as compared to lump sums investment-
- There is no need to speculate or focus on timing the market
- Since the amount is invested on monthly basis, there is little to no impact of market volatility.
- With a passive and automated approach you can be more committed to guaranteed saving/investment
- SIP is a very flexible plan, wherein one can create/update/cancel SIP anytime. Most funds have investment amounts starting from a very reasonable Rs. 1,000 every month.
In order to enhance wealth creation, besides having a clear idea of SIP in mutual fund, you also need to plan your SIP investments prudently, so as to find out the best fund for SIP. Annual, monthly and quarterly intervals definitely scale up overall prospects of purchasing fund units when the prices go down. Also, it is important to chart out a long-term investment plan for which SIP is the most effective and beneficial for long-term investment periods as it enables the long-term investors to reap good returns over a period of time. There is a higher probability of long-term investors profiting from the appreciation markets. There can be diversification of investments by investors and this will help in lowering the overall risk and also in gaining returns which are more optimized. You only have to follow some basic steps in this regard:
1. Do the online registration for your SIP
2. Enter all the necessary information asked for
3. Make sure that you have enough funds at your disposal for investing