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Start a SIP today!

This article was posted on Mar 15, 2016 and is filed under Market News

Start a SIP today! Dreams can only be achieved if you work towards them. Even building wealth is no different. A Systematic Investment Plan (SIP) helps you do just that. With SIP, you can invest a fixed amount in mutual funds step-by-step monthly or quarterly over a period of time, thereby averaging out your cost of investing and benefiting from the power of compounding.

In short – Why SIP?

1. Disciplined approach to investments
2. No need to time the market
3. Harness the power of two powerful Investment strategies:
a. Rupee Cost Averaging – Benefit from Volatility
b. Power of Compounding – Small investments create Big Kitty over time
4. Lighter on the wallet
5. Reap benefits of starting early

As you can see, SIPs score by a wide margin over the popular market timing wisdom. The only point is that if the market goes up continuously without taking a break, then a buy-and-hold strategy or lumpsum investment would score over most strategies, including the SIP route.

Even when markets are at record lows, lumpsum investments will score over every other strategy. However, since the market is unlikely to move in a linear fashion all the time, rather, there would be constant crests and troughs, it makes more sense to have a disciplined approach to investing.

Cost averaging is an added advantage. Remember that averaging a fundamentally bad investment will do no good and hence SIP should be used for fundamentally sound investments only (be it stocks, mutual funds , or gold).

An SIP of 5000 a month for 2 years will value at 1,20,000. We can expect an approx return of around 20%+ in a year.

Below SIP’s can be entered:

Reliance Banking Fund (G)
L&T midcap fund (G)
SBI pharma fund (G)

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