SIPS: Asset Creation Medium

The sources of income are limited but the reasons for expenses are unlimited. One cannot simply sustain on their meagre income and traditional savings anymore; the high rate of inflation, depreciating value of the currency and rapidly changing lifestyle pattern leaves little to a negligible amount of money at the disposal of the people. This constricted financial situation urges people to look for better investment arenas to put in there money that not only earns returns but also enables them to create an asset in the long run.

SIP is one of such investment avenues that offers a systematic approach for the investors to follow and guides them to generate enough wealth for asset creation.

Reasons why you should depend on SIPs for long-term asset creation?

The Systematic Investment Plan is the comprehensive method of investing a fixed principal amount in liquid, hybrid, debt or equity-based mutual fund schemes on a regular basis. The simplicity of the investment procedure, the versatility of investment options and the potential of earning high returns make it attractive to both new and old investors.

The following highlights the reasons for selecting SIPs:

  • The ease of starting with small and increasing it over time with the growth in the income
  • The various advantages of starting early investments
  • The systematic and disciplined approach to investment
  • The freedom from timing the market and tracking its conditions
  • The opportunity for harnessing the benefits of potent investment strategies
  • The benefit of rupee cost averaging
  • The opportunity to compound the invested fund
  • The advantage of availing associated tax benefits

The following is the features of SIPs which allows asset creation in the long-term:

  1. Simple procedure: The simple procedure and ease of investing in the SIPs encourage the young investors to invest their money in it. The opportunity to invest even with a minimum predefined principal amount aids the young and small investors to put their money in SIP schemes and create asset over the long term.
  2. Rupee Cost Averaging: SIPs enable the investors to buy units at a low cost when the market phase is low and to sell them at a higher price when the market is thriving; thus enabling them to avail the benefit of cost averaging. This offers investors with the freedom from investing in the market without continuously tracking its conditions and allows them to create assets over time.
  3. Power of Compounding: The disciplined approach of regular investments over a long period of time magnifies the compounding effect of the SIP schemes. The investments earn returns which are further reinvested and bring returns and compounding interest for the investors. In the long run, this helps in asset creation.

SIPs are best when chosen for the long-term and continued even in the times of market vulnerability.  Contact our expert team of financial advisors and fund managers to find out which SIP scheme will be perfect for you and how should you approach it financially for making the most of it for asset creation.

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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 - 167127

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