Investing smartly and systematically in investment portfolio and Mutual funds known as Smart or Systematic Investment Plan, can make you rich.
What is SIP?
A Systematic Investment Plan (SIP) involves regular investment of a fixed sum in a SIP Mutual Fund portfolio. Investment by way of buying units regularly on the specific date will enable the investor with the leverage of managing his resources of funds. This is also a way of inculcating the habit of savings in one self. By planning SIP on a regular basis, he or she can definitely look at generating wealth in the long run. People often get confused as to how to calculate their total return on investment. Logging on to https://www.wealthcareindia.com/sipCalculator.php will simplify the matter.
The beauty of the SIP is that you can plan your investment either on monthly basis or quarterly basis or yearly basis. The number of units the investor can buy depends on the current market price of the units. With SIP and Mutual Funds being flexible, the investor has the right to decide on the amount to be invested.(https://www.wealthcareindia.com/fundPerformance.php)
SIP Mutual Funds
SIP Mutual funds are a way of providing opportunity for an individual to invest in multitude of stocks through respective fund managers. As an individual, a person may have access to information on a few stocks at a time. In a mutual fund, the money will get invested into a bundle of stocks and the entire process is managed professionally by experts. To an extent, the risk factor is lower than directly investing in equities. Investment in SIP Mutual funds will take care of the interest of the investor.
SIP Mutual funds possess and allows for diversification which in turn means that an investor’s money is pooled with investments from others. This means you will be buying a part out of the pool of investments. Thus, the investor will have lot of options in choosing the plan of his choice. https://www.wealthcareindia.com/fundFactsheet.php gives a systematic review of each mutual fund and SIP, providing you with details like the entry and exit load, their provisioning for equity and debt, the Net Asset Value etc.
Further, few asset management companies also offer insurance cover. So, in a way you get two benefits in one!
There are many reasons why you need to go with SIP Mutual Funds. Few of them can be:
Comparison with FD as an investment
There may be doubts in the mind of the investors regarding ways of investment and where exactly to invest. There are many people who think that investing in fixed deposit (FD) is the best option and risk free.
Comparison with PPF as an investment
Let us compare the investment in SIP Mutual Funds with PPF.
As is the case with FD, PPF guarantees the investor with an assured return but there is strict lock-in period. You can withdraw money from PPF, but it’s restricted to a certain percentage and thus, the money invested cannot be used during financial emergencies.
The returns on PPF are known to be at par with the inflation rate and thus, the value of your money, does not increase much, over a period of time. Investors invest in PPF, in order to avail benefit under Section 80C. As per the directive of the Government of India, an investor can invest only Rs. 1.5 lakhs a year to claim the benefits from section 80C.
If you would have started investing Rs. 1 lakh annually from March 1996, as of April 2018, you would have gained Rs. 42 lakhs (approx.), against total investment of Rs. 23 lakhs. The total value of your investment would have been Rs. 64 lakhs 91 thousand.
However, if you’ve had invested same amount annually in equity fund, you would gained 6 crore 85 lakhs.
Investment in equity mutual fund scheme, would no doubt had given you 3 times more return annually.
Hence, Investment in equity mutual fund scheme is no doubt a better option.
Why you should invest when the market is down
When you invest in a SIP, the fund manager buys units of several companies for you, based on their research and opportunity for profit. When the market is down, the stock price value of the respective shares is generally lower. This means that if you start investing in a SIP when the market is down, or if you invest a higher amount of money, you will be able to buy many more units, at the same price, as opposed to when the market was higher. Most financial advisors advice starting an SIP or increasing the SIP amount, when the market is down. In the long term, it will make you a lot of money.
If you are an investor with flair for accumulating wealth, then SIP Mutual Funds are the best option for you. Your investment will not only be growing but at the same time gives you the flexibility of planning your future. SIP gives you flexibility, fulfil your dreams and allows you to be a stakeholder in India’s growth story. It is one of the best financial instruments to invest in, if long term wealth creation is your goal.