With the current crisis and the global pandemic COVID-19, has surely created volatility and uncertainty in the market. Considering the situation as of now, investing in a systematic investment plan has become a preferred choice over other investment options available in India.
Why Invest in a Systematic Investment Plan?
When it comes to a systematic investment plan it does offer a range of choices right from saving to other investments so that one can achieve different financial objectives.
In case you are unaware, then the systematic investment plan also helps to maintain a certain financial discipline. This essentially implies that an investor is upon the right track to accomplish different financial objectives. The key aspect of investing in the systematic investment plan is that you need not worry about any unexpected or drastic changes in the financial markets specifically if it is an equity market. When you try to invest regularly then chances are high that movement of the market can weigh heavily on the premise of the investor’s ability of decision making.
Moreover, it inculcates important financial discipline in regards to persistency that means investing constantly. When it comes to accomplishing a long-term financial objective, investing regularly over time is prudent and systematic investment plan does help in doing so.
Now, the SIP also brings in the compounding power wherein the investor who has earned the return upon the investment will in turn possibly act itself as an investment, which will, of course, increase the final return. Moreover, another highlight of investing in the best systematic investment plan is that it permits you to plan for the financial objectives more accurately. To achieve the planned financial objectives, you can easily break down both the short-term and long-term goals. At every stage of your life, you can easily assess how close you are to achieve the financial goals that you have planned.
The systematic investment plans enable you to average the buying price and maximize the returns accordingly. So, when you invest constantly over some time regardless of the market situation, most likely you will have more units specifically the market is low and when the market is high you will get fewer units. This essentially averages out the buying expense of the units of mutual funds. Besides, you can invest in the scheme of mutual fund via systematic investment plan with an amount as low as Rs 500.
I want to Customize the Systematic Investment Plan. Is it Possible?
Yes, if you wish to customize the SIP you can easily do so. One of the most opulent SIP is when you are investing an amount that is fixed each month, then you can simply customize the way you put the money through SIP. There are fund houses in India, which permits the investors to invest as per the convenience such as bi-monthly, fortnightly and monthly.
Besides, the step-up SIP permits the investors wherein they can increase the SIP sum periodically. Another sort of regular SIP is the alert SIP that will send an alert to the investor to purchase more when the market is down.
When it comes to the perpetual SIP, then the investors will not have to select the end date of the systematic investment plan. Once the objectives are met, the investors can easily write to the fund house and stop the systematic investment plan.
Is SIP a Risky Investment?
Systematic investment plans are surely the safest and easiest way when it comes to investing in mutual fund schemes. Moreover, it will remove the peril of purchasing it a time,which is not appropriate that is when the market is high or purchasing when the market is cheap.
The systematic investment plans ensure that you can invest via various markets, which minimize the risk timing. The intrinsic risk engaged with mutual fund contributing originates from the investment, which the fund makes. There are high-hazard ventures that offer the potential for high rewards, and generally safe investments that guard the venture however offering returns at a far that has a lower rate.
The systematic investment plans are not at all a risk-prone investment, yet the scheme of mutual fund in that they contribute could convey a more prominent measure of risk than an investor can deal with.
In case you wish to know the eventual value of a SIP you can also use a SIP calculator online, which will should the complete value of the investments you will be able to gain over the coming years. Provide the important subtleties such as an amount of investment, rate of returned and the term. The use of a SIP calculator will let you know and give you an idea of how much one would need to invest and the rate of returns that one would need to achieve the goals. Use the SIP calculator and obtain a realistic idea of what the investment will be over the next coming years.
The Bottom Line
The systematic investment plan will help you create and grow the corpus over a long-term investment. Therefore, start investing in a SIP as early as possible.
Undoubtedly the systematic investment plan is the journey towards prosperity financially, which moves via the road of discipline financially. Somebody once said that the ideal time to invest was twenty years ago, and the second ideal time is right now. So, make the most of this significant asset that is time so that the investment portfolio even works harder.
Do not be in a rush, give time to the investments and it will create wonders for you