Why should you jump onto the SIP bandwagon now?
Investors are nowadays preferring to invest in Mutual Funds using Systematic Investment Plans as they are seeing the benefits. In this method, you invest a small portion of your money at regular intervals. For example, you can invest Rs. 500 per month to create an unemotional approach to investments. As an investor, you can use the SIP calculator to calculate the returns from your investment before taking the plunge.
There are many benefits of investing through this method. While it maintains investment discipline, you remain calm, clear, and focused on your goals. Here are reasons to invest in them:
Rupee cost averaging
When the Net Asset Value is low, you get more units of a Mutual Fund. Meanwhile, with a high NAV, you get fewer units. Under Lumpsum Investments, you get only a fixed number of units. Upon redeeming them, Systematic Investment Plans fetch you more units than lumpsum. You must use the calculator for calculating your returns on investment. Getting more units of a Mutual Fund does not indicate higher profits.
Power of compounding
Compounding is often referred to as the eighth wonder of the world. Compounding occurs when the interest earned from the investment gets reinvested with the original corpus, making it grow and earn. Every time your investment grows, it gets reinvested, making the original corpus grow larger into a substantial sum.
Investment discipline
Using the SIP Return calculator makes you a disciplined investor. There are chances of making mistakes while timing the market. You should maintain discipline while investing as emotional investments do not count. You should be aware of your financial goals and risk appetite before investing in Mutual Funds or other market-linked instruments.
Choosing between investment methods
If you have a surplus and wish to invest in a well-researched fund, the lump sum is the best idea as it allows you to pool your money immediately. In case you have limited resources, the SIP is ideal as it enables you to invest small sums of money at pre-decided intervals. You can track, monitor, or stop the SIP payments at any time or increase the amount if you have a surplus.
You also benefit from the flexibility to invest a portion of your income into the chosen fund and cultivate a disciplined investing method. When using the trading app for the first time, you can start with systematic investments and place lumpsum orders on certain surplus funds to achieve your goals faster and more efficiently.