Benefits of Systematic Investment Plan (SIP) Mutual Funds

Benefits of Systematic Investment Plan (SIP) Mutual Funds

Once there was a time when investing in Mutual funds was considered high risk, and there was too much volatility in the market for any benefits from Market stocks. With the emergence of SIP Mutual Funds, this has changed completely, which offers a modern way of investing in market stocks with lower risks and higher profitability for your future financial resources.

Building money necessitates financial discipline and a long-term investment strategy. SIPs promote disciplined investment while also allowing for the accumulation of wealth via small, regular payments. It also offers the benefit of rupee cost averaging as well as the freedom to choose your own quantity and frequency, making it an excellent investment option for just about any individual.

At Wealthcare India, we are going to share with you the advantages or benefits these sophisticated funds offer investors in significant terms.

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What are SIPs, and how do they work?

You may divide your investments into quarterly or monthly installments using a SIP. You may either write post-dated checks or use the electronic clearing service (ECS), which allows your bank to regularly debit the money to be deposited in a mutual fund scheme on a certain date.

SIPs are great for individuals who lack market knowledge, a large lump sum to invest right once, or the time to check their assets regularly. SIPs allow you to take advantage of the power of compounding on your investments and develop a substantial corpus over time.

What is the meaning of rupee cost averaging?

Every ordinary man realizes that when purchasing a product, one should purchase when the price drops and sell when the price rises. When it comes to investing in equities, however, we do the complete opposite.
While contributing every month, a SIP investor would end up purchasing more units when the market falls and fewer units when the market rises.

Rupee cost averaging illustration:

Investment Plan


No Of units


During every market drop, an investor will end up purchasing more units. He tends to profit as the unit price rises.

Advantages of SIP

  • Discipline Investor
  • With Systematic investments, one is bound to have a habit of investing, albeit in a small amount, and when they see the yearly returns, they start making progress for a better future perspective. This makes them regular investors, which gives them financial security in their upcoming time.

    This method of SIP is quite easy, convenient, and adaptable, offering a wide range of choices for investors to bring their money to the market. Also, make your monthly installment done near the day of the salary so that other expenses are more manageable in the specified duration.

  • No Market Dependency
  • There are usual market misconceptions that one should not invest in the markets while they are high as the benefits will be low, but with a Systematic Investment Plan, you will get complete rupee cost averaging, allowing for better management of investment itself.

    When the prices are high, NAV units bought will be low, while as the prices get lowered, more units will be purchased, thus averaging the rupee cost value in the market entirely. Hence the timing of the market should not affect your SIP funding in any way, and start them early as possible to get more benefits later in life.

  • Short term targets and Long term Goals
  • Every individual must have some short-term targets and long-term goals to achieve in their life. Once they are set, you must focus on achieving those with the right methods for investments.

    There might be regular expenses, yearly expenses that need to be separated from regular investment so that you can lead a more balanced life. Car Loans, Annual fees, Home maintenance, Shopping, etc., are regular investments of specific targets only while Child education funds, marriage funds, Retirement funds, home loans are long-term investments that must be given enough time to reap more benefits from these funds comprehensively.

  • Customized
  • Many mutual fund companies provide a variety of customizing choices, such as investing frequency (fortnightly, monthly, quarterly, etc.). This allows the investor to align their income stream with his investment.

    Additionally, an investor can increase his SIP by a specific percentage each year (or at a certain period). This enables an increase in investment to correspond to an increase in the investor’s income. Perpetual SIPs are another possibility. There really is no final date in this. As a result, once the financial target has been met, the investor can discontinue the SIP.

  • Large Wealth Creation
  • These SIP investments open your gates for large wealth creation step by step with the ease of small amount investment. Compounding interests are the way for large wealth creation; the more time you allow in the investment to mature, the more you will reap the takeover’s maturity completely.

    Hence one must focus on starting their SIP as early as possible, even with smaller amounts that can be further increased later to give added benefits brought on by the power of compounding. Each year, this amount increases with hefty margins, so a delay of 5-10 years can have a large difference at the time of the final amount entirely.

  • Conclusion
  • SIPs are preferable in the long run since they balance out the stock market’s good days and bad days, protect you from making bad decisions driven by emotion and provide superior prospective returns. As a prudent investor, you should take advantage of the benefits of SIPs as a way to invest gradually and attain your investing goals.

  • How can Wealthcare India help you?
  • At Wealthcare India, we offer expert suggestions. (being a mutual fund distributor, we cannot use words like advisor and planner for ourselver, nor the related wordsfinancial advice for investing in various funds in the market with their approach, the time span of investment, maturity benefits, and tackling the market highs & lows on the basis of past, current, and future perspective based on the individual financial status.

    Our experts can guide you in making smart choices for selecting the right funds as per choice as well as requirements to meet life goals and targets in life. These modern ways of investing with SIP have proven to be a lot of success in the current time, attracting a lot of investors in the market.

    CA Mukesh Gupta
    CA Mukesh Gupta
    Mukesh Gupta is the founder and director of Wealthcare. He is Fellow chartered accountant, Certified Financial Planner and Certified Public Financial advisor. He is in financial services industry since 1994. He conducts free money management sessions for corporates and associations on topics related to Personal finance. His previous engagement was with Birla Sunlife group. He regularly writes on topics related to Personal finance and occasionally appear on electronic media.

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