Of late mutual funds have become talk of the town. Investors seem keen and are venturing into this investment option leaving the age old fixed deposits behind. For all those investors who want to make a foray into stock market but lack of time forces them to invest aggressively in mutual funds. Now the question is investing in SIP a good idea? Why not when this equity asset classprovides you with an opportunity of earning considerable returns in the long run. You are bestowed with various advantages and it poses to be a win win situation for them. Let us now get into the depth of why mutual funds might be a good choice for an investor
Develops the habit of saving
The main benefit of SIP is culminates the habit of saving and invest instantly. A sense of commitment is developed in a visitor that they have to keep a fixed sum of money aside every month. Since the amount of money is nominal be it Rs 500 or Rs 1000 you are not burdened. SIP has turned a new leaf in terms of investing and saving. The decisions of saving that you used to postpone to a later date are a thing of the past as you think of investing straight away.
Financial objectives are achieved
If there is no plan in place it becomes really difficult to achieve things in life. This similar situation replicates to your life goals. You might be thinking of going for a vacation. But this plan will not materialize till you set certain ground rules. SIP helps you achieve those dreams. Be it a short term or long term plan SIP helps you to achieve your dreams. Since the entire process of SIP is goal oriented and specific you are always on the right track. In the expected time frame you might be able to achieve your goals. Even during the emergencies you can withdraw your funds.
Investment cost is on the lower side
From your investment each one of us expects wealth creations. When it comes to equity investments you need to have a robust strategy to mint money. Another important tip to make money would be to lower down your investment costs.
Cash in on the power of compounding
Compound interest means you are going to earn interest on the sum generated. When you invest in the power of SIP you earn compound interest on the invested money. As you move in your investment journey you are able to earn more money. For this reason even a small investment of Rest 500 turns out to be a major corpus in due course of time. For this reason it is beneficial to start saving from as early as possible.
To conclude investment in SIP means diversification of your investment portfolio. You do not end up putting all the eggs in a single basket as you operate on the method of diversification.