SIP: The virtue of continuing long over a big amount

The thing about Systematic Investment Plans is that any investor with
any amount of money can start their investment through it owing to a simple
fact that in this scheme it is the investment horizon that matters more than
the amount invested. Even when SIPs are compared to other types of mutual
funds, SIPsis best for investors with limited savings and low-risk tolerance.

The reasons why SIPs should be continued for
long

The features of
Sip are such that it really doesn’t matter how much money one is willing to
invest through it what really matters in it for how long they are going to keep
it invested. In simpler words, it is the time horizon of the investment and not
investment amount that really matters in SIP investments.

The following
highlights why exactly SIPs should be continued for long even when it is not a
big amount:

  • Evening out risks and volatility:In the investment market, change is constant
    and one cannot really predict its next move or direction of change
    successfully. No matter how much amount one is willing to invest the risk of
    losing it amidst a volatile market is always there. In such a situation, having
    an investment plan that stretches over a long time span proves to be really
    helpful.  When investors continue their
    investment for a long time even when the market is stagnant or low, investors
    can ease out the riskby holding onto their investors for longer and continuing
    them until the volatility evens out.
  • Timing the market: SIP investors know the value of focusing on
    regular investments; their regular investment habit and dedication towards it
    inculcate a sense of independence in them when it comes to timing the market.
    This helps them to invest freely in the market without constantly tracking
    every move and curve of the market. The long investment horizon helps SIP
    investors to build their confidence while making market investments.
  • Meeting Financial Goals: The journey towards a financial goal cannot be
    covered in a day and it requires a disciplined and systematic approach towards
    investments in the market. This is the main reason whyinvestors should continue
    their investments through SIP and utilise their small saving to make regular
    investments towards meeting their goals. In SIP, even a small amount of
    investment gets accumulated over time and helps investors to meet their much
    desired financial goals.
  • Compounding Power: The feature of compounding the interest on
    investments and reinvestments makes SIP an attractive option of investment even
    for those investors who have a very limited amount to invest. The philosophy of
    spending little to gain more works in favour of SIPs because of this
    feature.But this feature only works best when the investment through SIP is
    continued for a long time to actually be able to accumulate the earnings
    generated through investments.

Contact
our team of expert analysts and fund managers to help you invest in SIPs better
so that you can utilise even a limited sum of money in your favour to earn
great returns down the years.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 85350

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