Invest in MF: Mutual funds are popular investment vehicles to attain financial stability & achieve goals for the future. It is also one investment vehicle that is most popular these days, as more and more people are shifting from traditional investments to mutual funds. Let us check out a few key reasons to invest in mutual funds through SIP (Systematic investment plans).
Invest in Mutual Funds Made Simple with Enhanced Features for Today’s Investors
Today’s mutual fund investing is characterized by enhanced digital accessibility, providing investors with seamless access to a wide array of funds and advanced tools for portfolio management and analysis. This includes user-friendly mobile applications, online platforms, and robust investment dashboards, empowering investors to make informed decisions at their fingertips.
Additionally, advancements in fintech have led to the integration of artificial intelligence and machine learning algorithms, offering personalized investment recommendations and predictive analytics to optimize portfolio performance.
What is an SIP?
Advantages of SIP
- Easy to access: A systematic investment plan is the easiest way to invest in equity markets. It doesn’t require a deep understanding of the market to start and empowers users with stability in investments through diversification.
- Liquidity: Systematic investment into mutual funds through SIPs provides high liquidity, and the funds can be accessed at any time. Unlike traditional investments like FDs, where you must invest a higher amount to get a high rate of return, and that too after a certain maturity period.
- Benefit of averaging: SIPs into mutual funds provide you with the cost of averaging benefit as it keep adding more units during a fall or in the market making your initial investment cost cheaper and thus helping you with significant returns over extended periods of time.
- Inflation beating returns: Traditional investment assets don’t let you hedge against rising inflation. Mutual funds do help you with higher returns over a prolonged period, beating all traditional investments as well as inflation. Thus, making you financially stable.
- Tax benefits: As the government focuses on the financial inclusion of individuals, it encourages investors to participate in India’s growth story and encourage investments into capital markets. Hence, the government has created a special category of mutual funds in which you get tax benefits by investing in ELSS (Equity Linked Savings Scheme) mutual funds. (Equity-linked savings scheme).
- Goal planning: Mutual funds can be the most suitable vehicle for achieving your long-term goals. As mutual funds give returns higher than any traditional investment asset class, it provide an edge over all the other asset classes so that investors can plan their retirement, home purchases, children’s education, etc. Fun Fact: Crucial decisions like picking insurance, can also be done with the help of an SIP.
- Diversification: SIPs into mutual funds help you diversify your portfolio into different asset classes in one go. The various categories of mutual funds, such as equity, multi-asset, hybrid, etc., aid in investing in various categories at once without worrying about over- or under-exposure to these assets.
Note: You can use an SIP calculator to figure out the number games.
Summing up
Systematic investment planning provides an edge over lump-sum investment as it helps in diversifying your money into dissimilar categories at different points in time, thus leading to maximum utilisation of all the above benefits.
It is most suitable for beginner investors who want to start investing for wealth creation but don’t have the resources and information to invest directly in equity markets. SIPs help them invest in equity markets with as low as Rs.100 through SIP’s.
What are the benefits of SIP in mutual fund?
Think of SIP in mutual funds like planting seeds regularly. It’s a smart move because it lets you invest small amounts at regular intervals. This approach smooths out the investment journey, like taking steps rather than big leaps. It also helps you benefit from something called rupee cost averaging-buying more units when prices are low and fewer when they’re high.
Why is SIP investing the best way to invest?
Picture SIP as a disciplined investor’s secret weapon. It fosters a habit of regular investing without the hassle of timing the market. It’s like building wealth drop-by-drop, making investing a habit rather than a one-time event.
What is unique about SIP?
The uniqueness of SIP lies in its convenience and consistency. It’s like a slow and steady racehorse in the investment world. While it might not give sudden, massive returns, it’s reliable and reduces the impact of market volatility through its disciplined approach.
Which type of SIP gives the highest return?
There isn’t a one-size-fits-all here. Different SIPs cater to various risk appetites, goals, and durations. Equity-oriented SIPs, often tied to stocks, can potentially give higher returns but come with higher volatility. Balanced or hybrid SIPs, blending stocks and bonds, might balance risk and returns more conservatively. It’s like choosing between a thrilling roller-coaster ride or a scenic train journey—both have their charms!
