Investing in mutual funds via Systematic investment Plans aka SIP makes sense even in volatile markets. Here are the reasons why.
It’s common knowledge that investing in equities is a MUST if you want to earn huge returns. However, playing the market comes with its risks. It is where SIPs help you get the best of both worlds – they offer convenience as well as exposure.
Check out the top reasons why you must invest in mutual funds via a SIP.
- You place your eggs in different baskets
Ask any seasoned investor, the one rule of thumb for investing; they are bound to answer, “Diversification.” Yes, a diverse portfolio is a must if you want to enjoy huge returns while minimizing risks.
However, diversification is not possible for small investors when directly investing in equities. You need massive amounts before you can diversify adequately.
The best sip plans overcome this issue. When you invest in equities via mutual funds, you enjoy the fruits of diversification; even with small amounts as low as 500 rupees per month.
- Your Portfolio is in the Hands of Expert Professionals
Another significant advantage of mutual funds is that your portfolio is expertly managed by professionals who have a team of resources at their disposal. They carry extensive research; do the homework on your behalf, making the best investments for you.
This is a great boon for those who want to invest in equities but don’t have the time or expertise.
- Transparent and Trustworthy Dealings
Both AMFI and SEBI monitor the mutual fund industry directly. Both these organisations, have introduced several regulations time and again to reform and ensure efficient functioning of mutual funds. Thus, MFs have emerged as a safe and trusted option for investors.
- Imbibes an iron discipline in Investing
Most investors have the habit of procrastinating. They invest one month, forget the next couple of months and start all over again. This is one of the major pitfalls in equity investing. To enjoy high returns, you have to stay invested, and SIP is the best way to enforce this habit.
You invest a particular amount every month, irrespective of your financial conditions. This helps you build a vast corpus over time, helping you enjoy the best returns.
- Doesn’t strain your Daily Expenses
Some investment options, though offer high returns remain out of reach of small investors because they require a lump sum to begin.
This isn’t the case of SIPs. You can get started by investing as low as 500 rupees per month. This doesn’t overburden your monthly budget. You enjoy the benefits of equities with spare cash in hand!
Above all, helps you Fulfill your Financial Goals
The main reason behind investments is to fund a dream: like buying property, providing higher education to your children or go on the long-dreamed foreign vacation. All these goals require huge amounts that can’t be raised in one shot.
With SIPs, you build a huge corpus by investing small amounts periodically. Fulfill your big dreams and aspirations with small, regular investments. This is what the best SIP mutual funds are all about.