Let us first understand what a Systematic Investment Plan is. It is an instrument of investment offered by Mutual Funds that allows an individual to invest small amounts instead of a large lump sum amount. These amounts are invested periodically and accrue over time. The investors must be aware of things like Net Asset Value, rates and costs, the possibility of alterations, etc. before they start investing. Further, even though it is seen as a safe and secure investment channel, it is affected by the ups and downs of the market, even though not drastically.

Why is Systematic Investment Plan an ideal investment option?

A SIP investment is not only a smart way but also a convenient way to see your money grow by making small investments periodically. You need not be involved as the amount that you choose to invest gets auto-debited from your bank account. The investor is sent an account of the investment and a statement that gives details on the NAV, cost, total investment to date, etc.

A SIP investment promotes savings and also acts as a cushion in case of emergencies. Not only does a Systematic Investment Plan help achieve short-term goals, but it also helps achieve long term goals. They are flexible as the amount of SIP investment can be altered as and when the investor decides on it.

There are four types of Systematic Investment Plans a potential investor can choose from: Top up SIP, Flexible SIP, Perpetual SIP and Trigger SIP. Each of these has benefits and disadvantages of their own and hence you must conduct thorough due diligence before going for the most suitable choice.

What are the benefits of investing in a Systematic Investment Plan?

There are some clear-cut benefits as to why you should consider starting/increasing a SIP investment if you haven’t already. 2019 is here, and here’s what you should be aware of before taking that final call!

1. Investing in a Systematic Investment Plan helps you get into the habit of saving whilst earning the best SIP return. It not only inculcates a sense of disciple but also helps you safeguard yourself against unfavourable circumstances. It is a known fact that SIPs are associated with low to moderate risk. Hence, for people with limited funds and long-term requirements, SIP is the best form of investment.
2. When people think of SIP, they think of long-term investment. Not only is a SIP amazingly beneficial in the long run, it helps you meet your long-term goals. This is basically due to 2 factors: rupee cost averaging and the power of compounding. In case you do not have a large sum of money that you want to invest, SIP allows you to invest a nominal amount as well and earn the best SIP return. In most cases, you can invest as low as Rs. 500.
3. Investing in a Systematic Investment Plan is very convenient and easy. This form of investment is very flexible as you have the power to start, stop and alter the amount you want to invest. In case the investor does not want to monitor the market in and out every day, SIP is the best option for them. Since the investor needs to hold the investment for a long period, the market fluctuations today will not really be very significant. Also, SIPs are associated will low risk.
4. People going for an online SIP Investment can also avail tax benefits if they invest in ELSS Funds. This is valid under Section 80C of Income Tax Act. There are 2 exemptions for SIP investments and hence these provide major benefits. We all are aware of the fact that the market is extremely volatile. There are times when there is a boom and then there are times when the market is depressed. Thanks to Rupee Cost Averaging, the investor has the power to buy more units when the market is at a low and buy less when the market is booming. This just helps in lowering the cost per unit of investment.
5. The amount of interest an investor earns gets accrued and compounded thus leading to a concept called the power of compounding. It is because of this that the investor benefits out of a high return SIP. Furthermore, SIPs are also extremely beneficial for young people. It is said that those wanting to invest in a Systematic Investment Plan must start early. The amount does not matter as it all gets accrued over a long period of time and hence no matter what the financial restrictions are, it is mostly a smart choice.

Therefore, if you are looking to invest in a safe and secure market instrument that requires less involvement and has low risk, a sought after online SIP investment is the correct alternative for you. SIP calculation, well beforehand, with a SIP calculator, (image is shown below) can also give you a clearer picture of your returns, followed by which you can choose the best SIP for a long term. Reach out to sites such as IndiaBulls and get acquainted with the best SIP plan to invest in. Start today!

Sip Calculator

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