Buying when the market is low and selling when the market is at its peak is easier said than done. A simple and powerful option of investing in this fluctuating market scenario is Systematic Investment Plan (SIP).
SIP is a method of investing a fixed sum, regularly in a mutual fund that allows purchase of units in a particular scheme on a given date every month / quarter. It provides benefit of investment without taking a call on when is the ‘right’ time.
Advantages of investing in Mutual Funds through SIP:
- Convenience: Enables you to invest a pre-set amount of money in the scheme of your choice automatically. You can issue post-dated cheques or give standing instructions to Deutsche Bank and your investments will happen on the specified date in the specified scheme every month.
- Less risky: It enables you to capitalise on periodic dips in the stock market and get more units at lower purchase price, thus reducing your average unit cost resulting in higher returns.
- Good savings discipline: It instills a good savings discipline as you are committed to invest a fixed sum regularly. Thus, you start investing before you spend.
- Easy on your pocket: You can decide how much to invest and how often depending on your capability.
- Compounding returns: The longer the period of your investment, the more wealth you accumulate, because of the power of compounding. The amounts invested early and regularly therefore helps in creating a substantial amount of wealth as returns over the years.
Start an SIP today with a small amount every month.