Know The Benefits Of SIP Investment Plan

Mutual funds is a good investment option if you want to reach your financial goals. The invested money can earn you returns. There are different schemes in which you can invest. But you should identify your goals and then select the scheme that helps you to reach your goal.

You can also invest monthly in mutual funds. This method brings discipline to your investments. For this you need to invest through Systematic Investment Plan or SIP. Sip investment plan allows you to invest regularly in mutual funds. Once you start a SIP you can then invest quarterly or monthly. There is minimum amount to start and there are a minimum number of installments. It is a convenient way as you do not have to write a cheque per installment you can directly get the amount debited from your bank account periodically.

Benefits of SIP

There are many benefits of investing through SIP. They are as follows:

1. As you invest regularly you do not have to time the market. In the long term the market fluctuations do not affect the investments.
2. Another benefit is Rupee Cost Averaging. As you invest a fixed amount you can buy more units when the market is low and less when the market is higher.
3. The invested money can help you create wealth in the long term. It is a good investment option rather than leaving the funds idle.
4. It is simple way of investing in a disciplined way without having to time the market.
5. It allows power of compounding. You can start early to save more. The longer the duration of investments the more you can enjoy the power of compounding.
6. There are financial advisors available to guide you in investing your money. They also help to calculate the right SIP.

SIP Investment Plan | Image Resource : freepik.com

Different strategies of investing in SIP

You can invest through SIP using different strategies. They are as follows:

Simple SIP

This allows you to invest a fixed amount of SIP every month for the entire duration.

Smart SIP

In this you can invest a fixed amount of SIP every month but you can increase the SIP amount when the market is cheap.

Growing SIP

In this you can increase the SIP amount as your income grows. As your age grows the income grows and so you can increase your SIP amount.

Target SIP

This a good strategy if you have to reach a target amount in the specific time period. In this you can invest accordingly to reach your target amount.