Systematic Investment Plan (SIP): Get into the Habit of Regular and Systematic Investing

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Looking for ways to create wealth? Start with admitting that neither wealth creation can happen overnight nor money left idle can grow on its own. ‘Investment’ is the only way to make your money grow. In this blog, you will read about Systematic Investment Plan (SIP) and know about its wealth creation potential.

SIP is not a product, it is a concept. Basically, it is a route to investment in mutual funds at a disciplined and regular manner. Through SIP route, you are allowed to invest a pre-determined amount at a regular interval (weekly, monthly, quarterly, etc.).  The process of execution is like recurring deposits, but SIP makes you invest in mutual funds.

There are various advantages of taking up the SIP route. Primarily, it makes you a disciplined investor and inculcates in you the habit of regular saving and investing.

Systematic Investment Plan (SIP): No Need To Time The Market

There are various investors, who understand that although risk-oriented but equity mutual funds have high wealth creation potential. So there are many who wish to invest in Equity but they hesitate to go ahead because they think equity investments require timing the market.

For all such investors, SIP is the best route because, with the systematic investment plan, it is not important what time you enter the market, rather it is important how much time you are in the market. In other words, you need not to time the market if you are investing in mutual funds through the SIP route.

SIP: The process is simple!

Step 1: First, you got to select the funds offered by various Asset Management Companies (AMCs), based on the performance of the funds. To know the same, you can take professional help or can visit fund’s rating websites. It is always advisable to select multiple funds.

For example: You are investing Rs. 5000, then instead of investing the whole amount in one fund. It is better to invest to Rs. 2500 in two different funds.

Step 2: Second, you need to pre-determine the amount you want to invest.

Step 3: Third, you need to pre-set the interval on which you will be investing. The majority of people invest on a monthly basis. The investment happens through ECS auto-debit.

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