SIP is a very common term nowadays, however many investors still not clear and think that SIP & MF are two different products. The fact is that SIP is just a mode of investment in MF. Instead of investing your entire money at one go, you prefer to deploy it systematically over a period of time just like recurring deposits with PO/Bank.
There are several Features, Advantages & Benefits (FAB) of SIP which most investors are not aware of:
Feature:
- Low minimum investment amount - can start with Rs. 100 or 500 even
- Date - any date between 1 to 28
- Frequency - daily, weekly, fortnightly, monthly, quarterly
- Flexibility - anytime pause, stop, restart, redeem - full or partial, increase or decrease SIP amount
- Convenient - with or without Demat, online or offline
- Asset categories - Equity, Deby, Hybrid, Liquid, Gold, Real Estate, Int. Equity
- Automated process - auto-debit from the bank account like EMI
- SIP Types
- Fixed SIP / Constant SIP
- Step-up SIP / Growing SIP
- SIP with Insurance
Advantage:
- Rupee cost averaging
- Power of compounding
- Risk management - manage the volatility of the market
- No need to time the market
- Keep your emotions of fear & greed in control
- Give the opportunity to participate in equity for small & retail investors
Benefit:
- Create wealth for an investor in the loner run
- Annuity for life
- Create a legacy for the generations
- Lighter on the wallet
- help to achieve all kinds of financial goals
- Small-small regular contribution can do miracle
- Consistency
- Discipline
- Patience
- Behavior Finance - mindset & attitude
SIP is a time test formula for wealth creation for retail investors. However, many still deprived of this scientific approach just because of their own behavior.
Disclaimer: Investment in securities & mutual funds are subject to Market Risk
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