7 Reasons Why You Need To Invest Via SIP

The future is quite unpredictable, but it can be less daunting when you have financial security. When you're young you can always find new ways of making money. But as you grow older, you realize that it's your investments that provide you with that sense of security.

Therefore, it's important to start investing at a younger age, so you can reap the benefits later. You can take an early retirement, start your own business, plan a big holiday, buy a second home, and so much more!

All mutual funds are subject to market risks and the traditional fixed deposits provide minimal returns. However, there is an opportunity to invest less, and get higher returns. Sounds unreal? Well, we’re talking about SIP!

What is SIP?

A Systematic Investment Plan (SIP) is an investment wherein regular fixed amounts are invested in the Mutual Fund scheme of your choice. Every month a fixed amount is deducted from an individual’s savings account and then invested in the preferred Mutual Fund.

What are the benefits of SIP?

1. Choice

The biggest advantage of investing in SIP is that you can choose the Mutual Fund Scheme, the amount to be invested, and the period of investment. An individual can start by investing Rs 500 as well. It is simple and convenient to track. In the long run it helps you save more.

2. Rupee Cost Averaging

SIPs focus on avoiding market timings and risks. In a fixed investment schedule, you avoid the hassle of searching for the right time and right amount to invest. But who does not like to make a little extra profit or avoid losses?

Rupee Cost Averaging is a unique feature of SIP, where an individual can buy more units when the market is low and buy less when the market is high. Therefore, you automatically reduce or avoid your losses and increase your gains.

3. Flexibility

SIP investment offers unbelievable flexibility. With SIP you can avoid long-term commitments such as investing in instruments like Public Provident Fund (PPF) or Unit Linked Insurance Plans. These open-ended funds do not have a fixed tenor, which means you can withdraw your investment as per your choice. An individual can withdraw the full or even partial amount from the investment, without incurring any losses. The amount of investment can also be increased or decreased as per your choice.

4. Higher returns

SIPs are an ideal option as they allow investors to earn high returns at a lower investment risk. You can invest a fixed amount either every week, every month, every quarter, or even half-yearly for a definite tenure depending on your income and financial goals. This helps you fight the various effects of inflation and keep your savings safe.

5. Power of compounding

SIP functions on the basic principle of compounding, i.e., you receive compound interest on your investments. Therefore, a small amount invested for a long time brings better returns than a one-time investment. When it comes to compounding, the period of investment is more important than the amount of investment.

6. Emergency Fund

Life is uncertain. You never know when you might have an urgent need for money. Since, SIP is an open-ended scheme, you can withdraw your money at any given point. Thus, it acts as your emergency fund along with being an investment.

7. Disciplined Investing

An important reason to start investing in a SIP is that it teaches you to plan your investment with discipline. Regular investments are critical to help you achieve your financial objectives, and SIP brings that discipline because of its nature and capabilities. You can invest a defined amount each month as per your preference.

The most important factor in choosing your SIP is your investment goal. Before you start investing, identify your goal, it can be long-term, short-term, wealth creation, or retirement. Remember, longer the duration, higher the returns. So, start investing now so that after years of hard work, you can take some rest while enjoying the peace of mind that comes with financial security.

Furthermore, it is important to choose a reliable and efficient financial institution to help you in your investment journey. Axis Mutual Fund is one such asset management company that has several schemes and investor services to help you in investment planning and solutions. Their investment experts will ensure that your hard-earned money helps you when you need it the most. For more information, you can reach out on 8108622211 or drop a Hi on their WhatsApp number 7506771113.

Disclaimer- Mutual fund investments are subject to market risks, read all scheme related documents carefully.

Above mentioned article is a sponsored feature, This article is a paid publication and does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever.