All ambitious and farsighted plan short-term and long-term goals to support various needs. With all the changing market scenarios several factors including increasing needs, inflation incidental requirement and time-specific objectives; all suggest that money saving alone cannot generate the desired wealth. Options should be faster, smarter, easier, and feasible are required. Other than the traditional forms of investments such as bank Fixed deposits, insurance policies and pension plans, the market-influenced investment options which are working well are seen beyond. One option that seems to appeal the most in the controlled, monitored, and relatively safer than share market is Mutual Fund Investments. Exploring the world of Systematic Investment Plan (SIP)
The SIP has emerged as the most popular investment avenue providing good returns on short-term as well as long-term investments.
Systematic Investment Plan (SIP) is a systematic plan of investments that helps individuals to invest a fixed amount of money every month in mutual funds.
This facility provides various benefits such as regular savings, decent returns, relatively safe, dollar-rupee cost averaging, and a great potential avenue for long-term wealth generation. Through fixed sums invested regularly the investors can benefit from market volatilities and hedge against the potential volatility. According to a research, the systematic investment investment (SIP) has emerged as critical divers of the retail inflow with nearly $3billion gross flows entering mutual fund through the SIPs. Particularly noteworthy is the trend as SIP flows have consistently been going up with a new record high of Rs 23,547 crore in August 2024. Under the Systematic Investment Plan (SIP)
Systematic Investment Plan (SIP) investors can invest small amounts on monthly or quarterly basis rather than investing a lumpsum amount. Very much similar to the recurring deposit account in the bank, the systematic investment plan (SIP) enables people to invest amount from 100 per month onwards through easy automatic reductions from the bank account linked with. The company and the bank are given the formal Electronics Clearance Services (ECS) for automatic deduction every month.
This is an investment plan that clearly mentions starting early and regular contribution for the best outcome. In the systematic investment plan, the bottom line is starting early and investing regularly. Long-term Investment: Bottom Line in SIP
Working of Systematic Investment Plan (SIP)
To generate handsome returns with minimum investments, it is very important to understand the working of systematic investment plan, SIP.
The Market Investment Experts advise the following tips on the SIP study:
1) Research deeply about the best SIP that are considered for investments.
2) Selection of a fund that properly aligns with the finance objectives and suit the risk profile.
3) Ascertain the amount, period, and frequency of the SIP investments.
4) Complete Know Your customer (KYC) formalities with ECS activation for SIP investment.
5) Once Activated the SIP starts deducting the amount from the bank and allots to selected fund.
6) The fund managing authority invests the collected amount in suitable market funds as per the investment objective.
7) The deducted amount on the date of opting SIP is utilized to purchase the units of the then applicable Net Asset Value(NAV).
8) The investors have the freedom to alter the SIP contributions as and when required.
9) Using the online facilities such as SIP calculator, the investors can evaluate the probable returns according to the selected systematic investment plan (SIP)
Understanding the salient features of Systematic Investment Plan (SIP)
- Long term building of wealth
The SIP is designed as a long-term corpus-generating plan. The steady and disciplined investments, along with the compounding power, can provide luscious returns in the long term for the investors. This kind of investment strategy goes hand in hand with long-term financial goals of several significant life events, be it marriage, buying a property, expansion of business, retirement planning, and many more.
- Flexibility in Investment
The amount to be invested with systematic investment plan (SIP) can be decided by the investor. This flexibility allows a large range of investors with different budgets to invest in SIP, hence it suitably accommodates both small and large investors supporting them to start whatever amount suits their financial objectives.
- Professional Fund Management
Market experts dealing with the management of systematic investment plan (SIP) investment are experts who frequently watch, analyze, and monitor the performance of different funds in the market. They focus on optimizing returns while effectively bringing down the risks possible along with it and offer the expertise required for high return investments to investors.
- Rupee Cost Averaging Benefit
This special feature of rupee cost averaging further benefits the SIPs with the upside of market fluctuations that investors gain from the market. When there is an upswing in the market, the SIP system purchases more units of mutual funds and, in the case of market downturn, it goes to buy fixed or minimum units. This approach helps mitigate the market volatility over time.
- Disciplined and Continuous Investments
Since the investors are permitted to pledge regular contributions, in the form of systematic investment plan (SIP), it fosters financial discipline and allows the building of wealth in the longer periods of an investment. This disciplined approach fosters consistency in making investments while inculcating a habit of regular savings or accumulation of wealth.
Major Economic Catalyst
As we see through the various financial products, schemes, and instruments, the systematic investment plan (SIP) is very effective as well as feasible to all range of investors. The SIPs offer a reliable and comparatively safer investment option that is working towards supporting individuals in wealth creation. These are efficient and productive tools in meeting their financial objectives supporting their dreams and shaping the reality.
