They say, ‘the journey of a 1000 miles begins with a single step.’ Systematic Investment
Plans work on the same philosophy.
A SIP is a simple, convenient and disciplined way to meet your financial goals. It allows you to make
the most of the growth potential of Mutual Funds, by
investing calculated amounts periodically.
There are three important principles of SIP:
- Start Early
Compounding is a powerful force in this facility, which essentially means growth
upon growth. By investing a fixed amount every month it’s not just the
amount invested every month that has the potential to grow, but the growth on
the previous monthly installments as well.
Example: January
January Growth + February
January Growth + February Growth + March
The earlier you start, the longer you can invest, the greater you can earn.
- Invest regularly
It is advised that you continue the race like a tortoise – Maintain a
consistent pace and not stop. This can help you manage market volatility, as it
lets you average out the cost of your investments over time (A concept called
rupee cost averaging).
- Invest the right amount
The big question that arises is how can you calculate the right SIP
amount? All you have to do is answer three simple questions:
a. What is my goal? (Example: To buy a dream house that would cost me
Rs.4000000)
b. How much do I expect to earn? (Example: I expect a 12.5%
rate of return per annum)
c. By when, do I want to reach my goal? (Example:
I see myself buying this house in 15 years)
Once you answer these questions, our SIP calculator will help arrive at the right amount for
you that can help you achieve your goals.
Reasons SIP is a SMART choice for your investments
Specific: SIPs can be very specific to the financial goal
you target
Measureable: SIPs showcase their performance every
month, thus giving you a status on how your investments are
fairing
Attainable: SIPs allow you to invest in small amounts
regularly, slowly directing towards attaining your big
dreams
Relevant: SIPs allow investments in Mutual Funds that
provide a wide basket of schemes to select from based on their relevance to the
Investor’s financial goal
Timely: SIPs
work on the principle of being timely; one needs to keep aside a set amount of money
every one period
Today seems like a good day to start your
first SIP.
This article should not be considered as 'investment advice'. We request the Reader to make
informed investment decisions and consult their financial advisors to determine the
financial implications with respect to investing in Mutual Funds.
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