Top 4 benefits of investing through SIP

Top 4 benefits of investing through SIP

Why you should choose SIP mode ?

You cannot earn crores of rupees overnight unless you have won a huge lottery. Money is accumulated over a period of time and the best way to multiply your savings is through investing them in a Systematic Investment Plan (SIP). As the name implies, this program allows an individual to develop his portfolio by investing small amounts at fixed intervals. The benefits of this plan are as follows:

No restrictions on amount to be invested:

Investors can begin an SIP with an amount as low as Rs.500. This allows people of all financial backgrounds to take advantage of this plan. Moreover, it inculcates the habit of saving since you have to keep aside a fixed amount. It is a disciplined investment mode which brings you one step closer to achieving your financial goals.

Convenient process:

One can select from different investment vehicles for SIP such as equity, mutual funds or ETF’s (exchange traded funds). In addition, you can also choose if you want to invest on a monthly, quarterly or annual basis. All you have to do is instruct your bank to enable auto-debit option so that the fixed amount is debited from your account every month eliminating the need for you to check every time if the amount is invested or not. Investors also receive periodic statements mentioning the number of units purchased and current balance.

Ability to multiply:

SIPs possess the brilliant potential of compounding. For example, if you start an SIP at the age of 25 investing Rs.5000 each month, in 35 years’ time when you reach 60, your maturity amount would be approximately 1.1 crores considering 8% interest rate. However, if you begin 10 years later with the same amount, you would have around 47 lakhs by the time you are 60 years which is less than half. Thus, the earlier you begin investing, the more your money multiplies.

Flexibility in terms of termination or modifying amount:

Apart from convenience, an SIP offers tremendous flexibility. You can continue the plan till the chosen date or you can terminate it as per your desire by submitting a written request. In a month’s time, the SIP will be discontinued. Individuals who want to increase or decrease the sum being invested can easily do so by ending the present SIP and beginning a new one.

SIPs are a safe investment option since they protect you from market volatility. These plans ensure that you invest a fixed amount regularly and reward you with long-term financial gains.