The most common question that almost everybody has whether one should at all invest during the unstable phase of the equity market. This doubt arises due to the common notion of considering the fall in equity price as a crisis. This is where a Systematic Investment Plan (SIP) comes into the picture. This investment plan is the best in the mutual fund schemes and ensures that the investors get suitable Returns on Investments.
The following points out why SIPs should be considered for long-term wealth creation:
Low on price; high in returns: SIP stands for the process of making an investment of a fixed sum on a regular basis over a period of time. The investments in SIPs take place regardless of the Net Asset Value or market conditions, which encourages the investors to buy more during the low phase. This practice fulfils the Buy Low, Sell High goal of the investors.It leads to a lower average price and ultimately yields higher returns.
Simple investment: It is probably the simplest plan that ensures regular investment and sound returns from the equity. The fact that the investors don’t have to be concerned about the timing of the investment enables them to not miss out on any potential opportunities to create wealth.
A discipline of regular investment: Since the market timing and lower average price of the equity tend to have a positive influence on the investors of SIPs; it encourages them to invest even a small portion of their savings regularly over a long period of time. This practice is bound to inculcate a sense of disciplined investment in them and helps them accumulate a good amount of wealth in due time.
Future goals: Almost all the investors, start investing with the hope of meeting their long-term financial goals. Be it purchasing a house, financing children’s education or retirement planning; a regular investment in SIP helps the investors to build a solid corpus over time to rely on.
Ideal for young investors:The young investors are among the ones who benefit the most by investing in the SIPs. The fact that they start investing early and continue doing so for a long period of time, makes them build a strong corpus. Even an insignificant amount of investment compounds over time and helps the young investors to accumulate wealth.
Perks of diversification: Have you ever heard of the saying, “It is never a good idea to keep all your eggs in the same basket”? This should be the golden rule for all the investors, who are regularly investing in the market. When the investors invest in SIPs, they are blessed with the benefit of diversifying even a small investment.The diversification of the investment tends to spread out the risks involved and enables the investors to profit from other holdings.
The SIP’s are a real deal for the long run but investors can avail liquidity and withdraw funds to meet their immediate needs. Contact us to find out more about SIP’s and its ability to create wealth.