9 Honest Reasons to Start SIP

9 Honest Reasons to Start SIP

SIP or Systematic Investment Plan has become a reliable and popular plan when it comes to mutual fund investments.
Whether you’re a beginner or a seasoned investor, everyone recommends starting SIPs as it is considered the most effective way to invest in mutual funds.
This article will let you know nine effective and essential reasons to start SIP to make the most out of your mutual fund scheme.

The first and primary reason behind starting an SIP is that it makes you a well-disciplined investor. Unfortunately, several investors start their trading journey, but as time passes by, their investing fails drastically because of a lack of regular investments.
Regular investments play a vital role in helping you get one step closer to your financial goals. The nature and ability of SIP is such that it adds discipline throughout your investment journey.
You don’t have to make a monthly investment all by yourself because an amount fixed by you will automatically get invested in the scheme of your choice.

When buying the mutual fund units, SIP helps in reducing the average cost. When the markets are falling drastically, the net asset value (NAV) becomes low and instantly gets high when the market is rising.
So in the long term, when you keep investing a fixed amount with the help of SIP, the average cost of these units remains lower than lump sum investment where markets are running in an upwards direction.

With the help of SIP’s, an investor can start investing because the minimum investment you require to start a SIP is a little RS 500 per month.
Compared to several other mutual fund schemes out there, this investment amount is way lower and better for millennials.
If you’re in your 20’s or recently started working, SIP will be a great choice to start an investing journey to meet your financial goals.

SIPs are highly flexible and a great mutual fund scheme for every investor.
For example:
If you're looking to invest Rs 500 in a SIP mutual fund scheme of your own choice, you don't have to keep on investing RS 500 investing every month.
If you have money or your savings are increasing in the future, you have the option to increase the SIP amount, or you can even start a new SIP scheme of your own choice.
You don't have to pay the same amount every month; you can increase the amount per your wish, which is an essential reason to start SIP.

Starting an SIP will help you to ensure that you are saving every month. Every month you're investing a fixed amount per your choice will save a small amount and add a financial discipline to your financial career.
You can even have the choice to pick the SIP date once your salary is credited into your account. This will help you to save some amount of money before you start spending your money.

You don't have to worry about the missed opportunities of SIPs nor the entry timings. Furthermore, since there is a fixed amount which you invest every month, it allows for "averaging."
It means when the markets are high in trading, fewer units of the fund will be added into your portfolio, but when markets are running low, a higher amount of units will be added to your portfolio. It will help you to create a perfect balance.
In this way, you will stay committed to your long-term SIP plan without stressing the markets' volatility.

There is also an option to stop or skip your SIP, which means you don't have to compulsorily invest your money every month for a fixed duration.
You can also skip or stop the SIP investment if you are not in a position to take the SIP further.
In case of a serious emergency, if you're not having adequate funds for the treatment or any other problem, you have the option to skip SIP payments for few months.

In India, mutual funds have grown steadily as several investors start investing to generate good returns.
To protect the returns and interest of all the investors, the Security Board Exchange of India (SEBI) and Association of Mutual Funds in India (AMFI) have taken several strict measures that every scheme of mutual fund and AMC has to mandatory follow these measures.
This has made the mutual fund industry completely safe and secure for investors who've just started investing in SIP or looking to start their investing journey through SIPs.

As an investor, it is extremely difficult to time the market accurately consistently. But in SIP's they do not require any way to time the markets.
All you have to do is keep investing your fixed amount every month irrespective of the market conditions. However, you will get additional funds if the market has fallen and will get lesser units when the market is high.

  • Does SIP helps to reduce costs while buying mutual fund units?
  • When buying the mutual fund units, SIP helps in reducing the average cost. When the markets are falling drastically, the net asset value (NAV) becomes low and instantly gets high when the market is rising.

  • Will starting an SIP help me to save money every month?
  • Starting an SIP will help you to ensure that you are saving every month. Every month you're investing a fixed amount per your choice will save a small amount and add a financial discipline to your financial career.

  • Does starting an SIP will make you a disciplined investor?
  • Starting an SIP will help you to ensure that you are saving every month. Every month you're investing a fixed amount per your choice will save a small amount and add a financial discipline to your financial career.