Mutual Funds through SIP best way for Investment
What is SIP?
SIP stands for Systematic Investment Plan. It is an investment method offered by Mutual Funds. Through the SIPs, MF houses allow investors to invest a fixed amount at intervals in a significant MF scheme. However, this is the best option for investors who plans to start achieving their financial goals.
1. Cultivates Investment Discipline:
The intermittent and programmed derivation that SIPs permit urges you to save just as contribute consistently. Rather than intending to begin saving money on a future date, you will put forth attempts to put resources into the plan on say, a month to month premise, and figure out how to accumulate sufficient assets to draw nearer to your monetary objectives, as for your kid’s schooling or retirement.
2. You can invest very little amount:
According to the reports, the Indian mutual fund houses permit investors to invest a minimum of Rs. 500 per month. However, investors may increase the SIP contribution as they continue with the investment. Or else, they could start another SIP in the same scheme or a different scheme.
3. No emotional investing in markets:
In daily trading, markets have their up and downs. The move will make investors regret missing out on an opportunity to purchase at the right time. The volatility may also cause you to make emotional investment decisions that will fail to deliver expected results.
However, in the SIP method, investors can invest in stocks on the safe side with a fixed amount each month. Moreover, if any irrespective of the short-term fluctuations in the market.
4. Rupee cost averaging:
The net asset value of a mutual fund scheme drops when markets drop. The NAV value may rise when the markets performed well.
If investors purchase different lots of mutual fund units at diverse prices, finally, they can bring those units on average.
On the other hand, in any case, investors investing a fixed amount irrespective of market conditions, the average cost of purchasing all the units will be on the lower side as compared to making a lump sum investment.
5. Easy way to start investing:
Top AMCs permit investors to register for a SIP account online. Moreover, they also manage their investment online. Further, the fund house allows investors to track scheme performance online.