Wednesday, December 16, 2009

Have investments SIP by SIP.....

Moral of the Fable: "Slow but steady wins the race".

Well, SIP is the same. A winning formula.

As every one is aware, SIP is a method of investing a fixed sum of money regularly in a Mutual Fund Scheme. It is quite similar to regular saving scheme in a bank account like a recurring deposit. The only difference is that there are good chances of getting a better return than a bank deposit when investing in stocks.

Every Financial Analyst (FA) will be after you to start a SIP, wondering why such emphasis on SIP,  Lets have a look on some benefits of it...
1) SIP offers you tax benefits which could come in handy if have to pay income tax.

2) Regular Investment makes you disciplined in your savings and also leads to wealth accumulation.

3) SIP comes with a locking period, so even if you wish to spend you cannot as the funds are locked and cannot be taken out.

4) Not need for large investment: In SIP, invest as low as 100, 500 or 1000 rupees. There is no need to worry if you do not earn a lot of money as you can still be a market investor with as low as 500 a month and even that would come up to be quite a good sum after a few years.

5) Experts work for you: In SIP, you invest in mutual funds where your investments are managed by market experts and professionals who have good knowledge in this field, so you have a chance to do much better than that of investing yourself alone.

6) Law of Averages: In SIP, you will be purchasing units at all phases of the market, high or low, depending on that you get the units share and so you don't need to worry about market going up or down. You just have to wait for the right time to take out your money after the scheme is over and no more deposits are being done. Thus your investments get averaged out at the end and the loss is very limited which is not the case when you invest all at once.

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