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Understanding the Benefits of SIP
Posted: Jul 28, 2018
SIP as a tool is also used by a number of mutual fund companies globally to draw investments from the investors into equities.
But what are the advantages of investing in mutual fund SIPs? While investing in SIPs looks like a risk-free option without any hassles, there are added advantages of investing in the same. Let us have a look at the same.
Helps Achieve Big Gains Using Small Investments
Mutual Fund SIP investments are ideal for those investors who wish to make a small investment month on month. By choosing the best mutual funds like ELSS, investors can invest as low as Rs. 500 per month. Such small monthly savings provide good returns in the future.
Rupee Cost Averaging
This is one of the main advantages of choosing SIP investments over others. If you are to consider a long-term investment, the concept of rupee cost averaging will help even out the ups and downs of the market, thus proving maximum benefits to the investor. By investing a said amount every month allows the investor to buy stocks or units when the prices of the same are lower. This certainly reduces the average cost of the purchases of all those financial assets that have been bought over time. As a SIP investor, you end up buying more stocks when the markets are down and will be buying less when the market is up.
Compounding
Everybody is aware of the saying, "Early bird gets the worm", and a much similar logic applies to best mutual funds investments. Any investor to starts savings initially is the one who is more successful. As SIP allows the investors to start with a small amount, anyone with a good source of income can start early to reap huge benefits. It is important to understand that all the investments and the returns in SIP are based on compounding and this helps the investors to earn higher returns over time.
The Convenience of Investments
SIPs provide the investors with an advantage of investing in small amounts every time and this can be done without any hassles. An investor can use the SIP ECS mandate form which allows the auto debit of the amount every month from the bank account. This is a one-time instruction that has to be given and the payments are made towards the SIP on the said date month on month.
Discipline
By choosing Mutual Fund SIPs investors get to follow a much-disciplined approach towards their savings. These also help to control emotions of the investors like greed, and frustration. Most of the investors also shy away from making an investment in markets due to the volatility of the markets. SIP investments in such scenarios provide good opportunities to investors to generate amazing returns in long term. You can as well know your maturity amount by using an online mutual fund calculator.
If you are one of those investors who is looking to do justice your hard earned money, start investing in SIPs and cherish your future goals.
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