Systematic Investment Plan, also known as SIP is the simplest, affordable at the same time easiest way of investment for our future needs. SIP is both handy as well as especially useful for investors who are facing difficulty in savings but have bigger dreams to fulfil.
Let’s see how SIP becomes an ideal option when it comes to investment.
1. It’s an expert’s field
One of the key advantages of investing through a mutual fund is the management of the funds by the professionals/experts. They not only have a regular track of the market but they also regularly carry out extensive research on various topics such as society, the economy, the industry, the company, etc., thus ensuring us an informed investment.
2. Putting eggs in different baskets
Another biggest advantage of investing through mutual funds is that even with smaller amounts, we can enjoy the benefits of diversification. One requires lots of money to achieve the desired diversification. This is not at all possible by many of us. Through diversification, the overall impact on the returns from portfolios is reduced, on account of a loss in a particular company or sector.
3. SIP is transparent & well regulated
The Mutual Fund industry is well structured by organizations like SEBI and AMFI. Regulations over the years have made smooth and transparent functioning of the mutual funds’ industry. This makes it both convenient as well as safer for investors to invest through best mutual funds to invest.
4. Market timing is irrelevant
When it comes to equity investment, the second most frequently crossed (inside our head) question is “WHEN” to invest. The first question is “WHERE” to invest. While the answer for ‘where’ is a mutual fund, the answer to ‘when’ will be SIP. SIP is known for its disciplined investing; irrespective of the state of the market. For SIP, market time is totally irrelevant.
5. No straining of our day-to-day finances
SIPs are well known for the fact that they do not strain our monthly finances. Through mutual funds, we are allowed to invest even small amounts like 500 and 1000. This shows how investments are quite easier here and SIP is an ideal investment option for a small-time investor.
6. Reduces the average cost
When it comes to SIP, we invest in a fixed amount on a regular basis. This is the reason why when the markets are down or NAV is low, we end up buying more units and vice versa. This is known as rupee cost averaging. It is normal for any human being to buy or invest when the markets are flourishing and avoid or stay away when the markets are down. Through SIP, we need not fear as it forces us to buy even when the markets are low, which is actually the best time to buy.
7. Helps to fulfil our dreams
No one would make investments without any purpose. They will be made based on many intentions and objectives such as a marriage, house, retirement, education, etc. There often comes a situation where many of these require a huge, one-time investment. One needs to build step by step, through small yet regular investments, as it is not possible for everyone to raise larger amounts within a shorter period of time. That is why SIP is recommended. Through SIP, small investments done over a period of time to gather up and result in large wealth to fulfil your dreams.
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