Sharekhan Blog

Why Should You Go for SIP Mutual Fund?

  • Sep 29, 2023
  • Small Investment Amount -

This particular investment quantity is quite a little less than what is required for the most common types of investments, such as FDs and ETFs. This ensures that the vast majority of people who have only recently begun earning money can invest so that they can achieve their long-term objectives.

  • Modify The Amount Of The SIP According To Your Preferences -

SIPs offer a great deal of adaptability. For instance, if you establish a systematic investment plan (SIP) for 1,000 Indian rupees (US 15) in a mutual fund scheme of your choosing, there is no requirement for you to continue contributing 1,000 Indian rupees (US 15) each month. You can modify the SIP amount or even initiate a new SIP within the same mutual fund scheme if you anticipate an increase in your contributions in the foreseeable future.

  • Put A Stop To It Or Bypass The SIP -

There is no requirement that the SIP investment amount is deposited on the same day of the month for a predetermined amount of time. If you do not have sufficient funds to invest, you have the option of skipping the SIP for a few months or perhaps stopping the investment altogether.

  • Creates In You The Attitude Of A Disciplined Investor -

Most investors get their feet wet but have trouble maintaining their investment strategy over the long term. Your overall approach to investing will benefit from the incorporation of more discipline when you use systematic investment plans (SIPs). You eliminate the need to make monthly contributions yourself by having a predetermined amount of money automatically put into the investment strategy of your choosing. This is accomplished by setting the amount that will be put into the plan.

  • What Exactly Is Meant By "Timing The Market," Though? -

It is extremely difficult to time the markets in a way that is both constant and precise. However, with SIPs, you have not required in any way to time the markets to maximize your returns. You make consistent investments of the same amount, regardless of how the market is performing. If the market is falling, the number of fund units you receive will increase, while the opposite will be true if the market is rising.

  • Helps To Bring Down The Average Unit Price Of Mutual Funds -

Continuing from the point made above, systematic investment plans (SIPs) also assist in lowering the average cost at which you purchase units of a sip mutual fund. When market conditions are unfavourable, the fund's "Net Asset Value," or NAV, will be lower, but it will be greater when market conditions are favourable. Consequently, in the long run, the average cost of purchasing the units tends to be on the lower side when you keep investing a fixed amount through SIP as opposed to making a lump sum investment when the markets are running high.

  • The Strength Found In Compounding -

When you begin your SIP, you have the choice of selecting the growth option. This causes the returns that your investment generates to be added back onto the initial amount that you invested. Because of this, the compounding effect takes place, which ultimately results in significantly increased returns in the long run.

  • There Is To Be No Emotional Investment -

When the market goes up and down, it might be difficult for an investor to remain unaffected by the movement of the market. People are sometimes encouraged to make emotionally driven financial decisions by the volatile nature of the market, which often does not yield the returns that were expected. 

  • Complete Transparency -

To protect the interest of the investors, AMFI and SEBI have implemented many severe rules that every mutual fund scheme and AMC have to follow. Because of this, the mutual fund industry has become open and trustworthy for investors who are just starting on their investment journey.

  • Monitoring Of Investment Portfolios Online -

Online management of investors' mutual fund investments is now offered by the majority of India's main AMCs. You will be provided with a user ID and password as soon as you initiate a SIP, allowing you to access your account from any location at any time. 

Conclusion -

It is time for you to start investing now that you are aware of the many reasons why a SIP can be an excellent choice and investment option. If you put off deciding to begin investing, it will only make it more difficult for you to attain the financial goals that you have set for yourself. 

Team Sharekhan
by Team Sharekhan

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