SIP Investment, SIP Mutual Funds

Is it the Right Time to Start Investing in SIP?

With Indian markets going through the positive phase and economy growing without any major issue, investing in the markets can be a calculative good idea. SIP Mutual Funds have become the trends for making a smart move in the market for their larger benefits. So how does SIP marked a positive impact among the Indian consumers? With ups and down still the part of the Indian market, these SIP’s have carved a more positive side of investing in mutual funds. They are more reliable, better manageable and results in better return values.

How does SIP work?

Systematic Investment Plan or a SIP involves a regular investment on monthly basis towards an equity mutual funds. You can adjust the investment to be daily, weekly or quarterly as per your ease of investing. Even the bank now allows automatic deductions which will transact the amount on your behalf towards that fund without any issue. With SIP your money is going to further invest into more than one companies stock rather than putting the money only on one stock. The whole amount is diversified which lower downs the risk profiling of their financial resources. This method has given a return of double digits in the markets which has further attracted the traditional customer to start making an investment in these mutual funds.

Absorbs Market Volatility: One of the major assumptions is not to invest in the markets when the prices are high and vice versa. Predicting the market for short-term is almost impractical as they might continue to be on the move up due to positive sentiments or it may slight down further after being undervalued. Duration inside the market is more important than the precise timing as it may be too volatile to get the right prediction every time one has to understand there are no rules it all depends on the current scenarios prevailing in the country as a large. Corrections in the stock market are bound to happen on regular basis and they might panic in the short term but they are not going to last long term in ongoing market conditions. That’s why it is recommended to give your SIP a longer duration of minimum 5 to 7 yrs to be on the profit side of the returning value always.

SIP investment

Suppose you have started SIP when the markets are high so the number of NAV units bought against it will be low but as the markets do down the NAV units will go up. This whole process is often called as ‘Cost Rupee Averaging’ allowing investors to have more confidence in their funds with long-term benefits rather than short-term returns. So when you allow your investment for a long time than the fall of markets for a day or two won’t have any meaning impact on the final return at all.

Objectives of the Investment: Most of the investments are done with the sole objectives that are you going to achieve by funding the respective SIP-like home down payment, marriage funds, education funds or the retirement planning. More time you give to the investment, better the result has been in the market for. It’s all about being disciplined in the market for keeping faith with the current market volatility. Short term gains are very few in SIP and require more time to be more stable for getting the subsequent benefits from the funds. Separating the long-term goals from short-term goals can define the time of your SIP Investment respectively.

Retirement funds can take more than 30 yrs or can be low as much as 10 yrs depending on your earning potential completely. While Education loans, Marriage loans have specified timing and amount that must be done with all the right calculation, to begin with as they depend on your children age. Home Downpayment can be short with 5 to 10 years in between allowing you to make each investment priority.

The Timing of SIP: This is another quite debatable reason for which time early, middle or the late part of the month we should equip our SIP with. A common assumption is that equity markets are volatile at the last week of the month due to F&O expiry but this myth has been busted with real data figures which show in the long term these are of hardly any matter of concern. So one should put their SIP at the beginning of the month always and let rest of the income take the usual monthly expenses routine otherwise it would keep your mind occupied for fulfilment and you might not be able to budget the whole scenarios in a more systematic way.

Risk Involvement: If you are investing in markets then there are always risks involved in it for sure. Markets can go too high or too low in a margin of hours that creates a lot of uncertainty in the minds of the investor for getting a stable performance from their funds respectively. SIP with their diversification in the funds allows the same investment to be used in more than 80 stocks for example. Even if we say 10 of those get lowered value while 30 are in the profit zone with rest no change gives leverage more to the profits. This whole process of SIP lowers the risk in your investment and adds in the confidence for further pursuing their investment with more discipline.

Duration: SIP’s have one of the major benefits with the power of Compounding. With each year the number of funds units i.e. NAV are going to increase and hence the final amount return results in double-digit of return. This duration will depend on the type of fund you have begun with and time you have given it to make sure the returns match the objective being set in the beginning. Even though there were few setbacks in the market, the final implications of these points don’t have a major change in the return value. The whole power of compounding makes SIP the best choice to start your investment for securing your future financially.

Conclusion:

With SIP one thing is sure that the results are quite positive when they are the investment is disciplined with time duration for a minimum of 5 years and then it goes on better when allowed to mature for more years. SIP almost removes the market risk for being higher or lows and puts the benefit on the right side of the investor only. You can start the SIP when the salary potential of individual gets in excess of their expenses. It’s just that you need to start SIP as early as possible and grow a habit to be disciplined in your life for better secure future with benefits of financial security.

Wealthcare India is one of the top financial firms that manage clients investment across the varying levels of market funds. Their online portfolio system offers 24×7 availability for customers to check, track and regulate their investment from anywhere around the world with personalized credentials. All important calculators related to SIP, retirement, marriage, education, and other loans related investment values. Contact us now to get assigned a personal certified financial expert for a customized plan to match your investment needs.

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