Article

Why Start SIP With 5paisa Today!

21 Dec 2016 Divya Nair

Systematic Investment Plan or SIP is a method that allows investors to invest a pre-decided amount of money in a set of stocks at regular intervals through mutual funds route. SIP helps one stay invested consistently. In SIP, investors are allocated certain number of units based on the market value of funds (also known as NAV or net asset value) for the day. Here are few more reasons that would entice you to start an SIP today.

  • 1. Periodic Investment -

    Investors can choose different periods of investments varying from daily, weekly, bimonthly or monthly.

  • 2. Auto Debit -

    Investors do not need to manually invest money every month. A pre-decided amount of money gets debited automatically from investors’ bank accounts.

  • 3. Small Amount -

    With SIP, investors do not have to put in a lump-sum amount in a mutual fund. Instead, they can start with as low as Rs 500 (the minimum amount varies from fund to fund). SIP in other words is an effective way to create long-term wealth with small investments.

    For instance, if I need Rs 50 lakhs after 25 years for my child’s marriage, I will have to invest a lump-sum amount of Rs 5.80 lakhs at expected return of 9%. Since I am an average salaried individual, investing such a big amount at one go would be difficult for me.

    Here comes the goodness of SIP into the picture. With a mutual fund SIP, I can invest Rs 5,000/month for the next 25 years consistently. With that, I will get nearly around Rs 50 lakhs after the investment period.

  • 4. Flexibility -

    If needed, investors can discontinue their SIP investments at any time. Further, one can withdraw the investment any time during SIP period without discontinuing it.

  • 5. No Lock-In Period -

    SIPs usually do not have any lock-in period, if invested in open-ended equity mutual fund. Open-ended schemes can issue and return units any time during the life of the scheme. Close-ended funds do not have these features.

Conclusion -

Regular savings, even if they are small, help create huge corpus in the long run. By starting SIP today, you can achieve your future financial goals, without having to invest huge sums of money. But to enjoy the power of SIP the most, investors must carefully choose mutual fund schemes as there are different types of funds - equity mutual funds, fixed income funds and balanced funds to name a few. Beginners are advised to take help of professionals to ensure that they choose the suited mutual fund schemes.

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Beginner's Corner

Why Start SIP With 5paisa Today!

21 Dec 2016 Divya Nair

Systematic Investment Plan or SIP is a method that allows investors to invest a pre-decided amount of money in a set of stocks at regular intervals through mutual funds route. SIP helps one stay invested consistently. In SIP, investors are allocated certain number of units based on the market value of funds (also known as NAV or net asset value) for the day. Here are few more reasons that would entice you to start an SIP today.

  • 1. Periodic Investment -

    Investors can choose different periods of investments varying from daily, weekly, bimonthly or monthly.

  • 2. Auto Debit -

    Investors do not need to manually invest money every month. A pre-decided amount of money gets debited automatically from investors’ bank accounts.

  • 3. Small Amount -

    With SIP, investors do not have to put in a lump-sum amount in a mutual fund. Instead, they can start with as low as Rs 500 (the minimum amount varies from fund to fund). SIP in other words is an effective way to create long-term wealth with small investments.

    For instance, if I need Rs 50 lakhs after 25 years for my child’s marriage, I will have to invest a lump-sum amount of Rs 5.80 lakhs at expected return of 9%. Since I am an average salaried individual, investing such a big amount at one go would be difficult for me.

    Here comes the goodness of SIP into the picture. With a mutual fund SIP, I can invest Rs 5,000/month for the next 25 years consistently. With that, I will get nearly around Rs 50 lakhs after the investment period.

  • 4. Flexibility -

    If needed, investors can discontinue their SIP investments at any time. Further, one can withdraw the investment any time during SIP period without discontinuing it.

  • 5. No Lock-In Period -

    SIPs usually do not have any lock-in period, if invested in open-ended equity mutual fund. Open-ended schemes can issue and return units any time during the life of the scheme. Close-ended funds do not have these features.

Conclusion -

Regular savings, even if they are small, help create huge corpus in the long run. By starting SIP today, you can achieve your future financial goals, without having to invest huge sums of money. But to enjoy the power of SIP the most, investors must carefully choose mutual fund schemes as there are different types of funds - equity mutual funds, fixed income funds and balanced funds to name a few. Beginners are advised to take help of professionals to ensure that they choose the suited mutual fund schemes.