WHAT MAKES ‘SIP’ A GOOD CHOICE FOR ‘BEGINNER INVESTORS’?
“Life is what happens to us while we are making other plans” Allen Saunders
It’s true for your financial future too, making the right investment decisions at a young age matters a lot for your future, this is exactly what decides how you are going to lead your life in the later years.
Have you decided to start investing the money you earn or what you already have? While there are many ways to start your journey as an investor, you do not want to invest all at once, do you? That won’t be wise. An investing routine is a key factor to building a strong investment portfolio. This is where an SIP investment plan comes into the picture. Before we dig deeper to find why you should start investing in SIP, let’s go through its basic definition:
What is SIP?
It is a smart wealth creation tool you can use to invest a certain amount periodically in mutual fund schemes. It is like a recurring deposit except for the fact that your money does not go into a bank deposit, but into mutual funds. Also, the minimum amount you can invest via SIP differs from one fund scheme to another. Systematic Investment Plan can help you fulfill long-term objectives in life by creating wealth overtime. Here is why you should enter into financial markets by investing in SIP:
- You Learn to Invest in a Disciplined Manner
Just like in other aspects of life, discipline is the secret to getting long-term success when you decide to start investing. When investing in SIP, you choose a certain amount that gets auto-debited from your bank account after regular intervals – weekly, monthly or quarterly. Each time your money is invested, some units are added to your account. In a way, you commit to investing regularly, which inculcates financial discipline in your life. Also, you need not worry about how much you should invest and when. You’ll figure it out as you go along.
- You Do Not Have to Be a Financial Wizard
Timing the market to invest in diverse financial instruments is a tough task. You can’t predict when the best time to invest your money is; it calls for in-depth knowledge about the market and technical analysis. As a beginner investor, you can avoid dealing with the market timing dilemma by investing in SIP. Although market volatility does have its impact on SIP, you need not worry about tracking the market regularly.
- You Will Enjoy Benefits of Compounding
When you begin to start investing early in SIP, you will get an opportunity to create substantial wealth over time. After a consistent period of investing, your wealth equals the amount you contributed to it plus the compounded returns you have gained.
- You Will Find It Easier to Achieve Financial Goals
Achieving your financial goals in life – buying a bigger home or planning your child’s higher education -is not easy with a regular income. However, the wealth you create by regularly investing in SIP can help you achieve these goals.
- You Won’t Face Financial Burden
Investing a bigger sum all at once is not advisable. Doing this may also create an obstacle in paying for other financial liabilities. SIP takes a different approach. It allows you to invest a smaller amount regularly than investing a bigger one in one go. SIP investments can help you achieve your financial objectives in life while you invest regularly and build a disciplined approach. If you need help in making the right investment decisions, connect with reputable financial advisory firms like FinEdge. Start early to earn more.