When it comes to mutual fund investments, SIP has shown to be a solid and popular method.
Everyone advocates beginning SIPs, whether you're a novice or a seasoned investor because it's the most efficient approach to invest in mutual funds. In this article, we have given 10 compelling reasons to start SIP in Mutual Fund sto get the most out of your mutual fund scheme and save money.
1. Investment is quite low
An investor may begin investing with the use of SIPs because the minimum investment required to begin a SIP is only RS 500 each month.
This investment amount is far cheaper and better for millennials than numerous other mutual fund plans available.
If you are in your twenties or have recently begun working and earning regular, a SIP would be a smartest way to begin your investing journey toward your financial goal.
2. Makes you a more disciplined investor
The first and most important reason to start a SIP is that it teaches you how to invest with discipline. Unfortunately, many investors begin their trading careers with high hopes, but as time goes on, their investments fail miserably due to a lack of consistent investments.
Regular investments are critical to achieving your financial objectives. SIP brings discipline to your investing path because of its nature and capabilities. You won't have to make a monthly contribution on your own since a certain amount will be put in the plan of your choosing automatically.
3. You have complete control over the SIP quantity
SIPs are a terrific mutual fund strategy for any investor since they are quite adaptable. You don't have to invest Rs 500 in a SIP mutual fund scheme of your choice every month if you want to invest Rs 500 in a SIP mutual fund scheme of your choice.
If you have money or expect to have more savings in the future, you may increase your SIP amount or even start a new SIP programme of your own choosing.
You don't have to pay the same amount every month; you can increase it as needed, which is a key benefit of starting a SIP.
4. Reduces Mutual Fund Units' Average Cost
SIP helps to reduce the average cost of mutual fund units when purchased. When the market falls sharply, the net asset value (NAV) plummets, and when the market rises, the NAV skyrockets.
So, in the long run, when you invest a predetermined amount with the aid of a SIP, the average cost of these units stays cheaper than when you invest in a lump sum while markets are rising.
5. It helps you save money on a monthly basis by automating the process
Starting a SIP will assist you in ensuring that you save each month. You will save a modest amount and add financial discipline to your financial career if you invest a defined amount each month according to your preferences.
You may even choose your SIP date once your payment has been deposited into your account. This will assist you in saving a certain quantity of money before you begin spending it.
6. You Don't Have to Be Concerned About Market Volatility
You don't have to be concerned about missed SIP possibilities or when to invest. Furthermore, because you invest a predetermined sum every month, "averaging" is possible.
It implies that when the market is trading at a high level, fewer units of the fund will be added to your portfolio, but when the market is trading at a low level, a greater number of units will be added to your portfolio. It will assist you in striking the ideal balance.
You'll be able to stick to your long-term SIP strategy without being concerned about market volatility.
7. SIP can be stopped or skipped
You can also terminate or skip your SIP, which means you are not obligated to invest your money every month for a set period of time.
If you are unable to continue with the SIP, you have the option to skip or stop the investment. You have the option to skip SIP payments for a few months if you have a significant emergency, don't have enough money for treatment, or have another difficulty.
8. Markets are not timed by SIPs
It is incredibly difficult to regularly time the market as an investor. SIPs, on the other hand, do not require any kind of market timing.
All you have to do is invest your predetermined amount every month, regardless of market conditions. However, if the market is down, you will receive more dollars, and if the market is up, you will receive fewer units.
9. Diversifies Your Investment
Market gurus always advise investors to diversify their portfolios. Similarly, even if you invest little amounts, SIP can help you realize the benefits of diversification. As you invest in many holdings, your risk is spread out. You'll be able to make more progress this way.
10. It is a Safe and Secure investment
Mutual funds have been continuously growing in India as more people begin to invest in the hope of making a profit.
The market regulator Security and Exchange of India (SEBI) and the Association of Mutual Funds in India (AMFI) have implemented various severe steps to protect the returns and interests of all investors, and every mutual fund scheme and AMC or Mutual Fund House must follow these policies.
This has made the mutual fund sector absolutely safe and secure for investors who have recently begun investing in SIPs or who are considering doing so.