Avail All The Benefits Of SIP Investment

Systematic investment plans eliminates the excuse of not investing. People often give excuse that “I do not have enough money and time for investment”. But with SIP, no excuse will work. This is because monthly required to start a SIP is very small (Rs.500/month). So, the money constraint is removed.SIP invests money automatically without self-intervention. So, time constraint also gets eliminated. Let alone the excuse, once you make SIP investment, you will see its benefits. For example, advantage of compounding of money by can be seen clearly in SIP (especially when horizon is long term).When I was younger I did not used to invest money. But SIP built that ‘investment habit’ in me.Not investing is a bad habit one must avoid it under all circumstance. Recurring deposit and SIP’s allows one to get rid of this bad habit is a very easy way. Nowadays, SIP in individual stocks is also possible.But here the risk is higher than mutual funds.A mutual fund portfolio consists of mix of several stocks. When one stock price falls its negativity can be balanced by others.But SIP in individual stocks cannot offer this balancing act. However, I consider both as a great tool to accumulate equity (gradually in long term). 


SIP allows us to buy stocks/funds systematically.The act of automatic buying is done through ECS. If we can accumulate equity like this, there can be nothing better.Now the question arises; when it is possible to buy stocks directly (with SIP) why to pay extra charges to mutual funds?There can be several justifications in favour of mutual fund SIP. But I will provide the one which is most important. When we invest in funds through SIP we need not bother about quality of stocks we are accumulating. This is responsibility of mutual fund manager. This is for what we pay them extra charges.If one has an online trading account then starting SIP becomes easy.

Let us take a practical example. By merely investing Rupees 1,000/month at interest rate of 9% per annum, one can make Rupees 2.0 Lakhs in 10 years.Same SIP amount will build Rupees 6.7 lakhs in 20 years, Rupees 18.5 lakhs in 30 years and Rupees 44 lakhs in 40 years.From these figures we can understand that more time we give to SIP, the bigger will be the corpus.

Now, you may enquire about different kinds of SIP mutual funds and decide which one to choose.