So, What is a SIP?
When it comes to investing in the stock markets, we often wait to collect a large amount of money and invest it all at once. These investments are done in order to finance our future goals like buying a house, child's education, marriage or retirement planning.
However recurring household expenses always erode the money which we would have otherwise kept for investments and the result - we end up compromising on our financial goals.
Systematic Investment Plan (SIP) is a financial planning tool through which we can invest in the stock markets, Mutual funds through small, periodic regular installments.
Example: we can invest as low as Rs 500/- on a monthly basis. Moreover we can also select the tenure of your installments.
SIPs help you set aside a fixed amount every month for investments thus contributing towards your financial goals.
It works like our most cherished personal loans we take to improve our standard of living…every month certain amount is chopped from the bank account as early as the salary gets credited…..but the difference is that these EMI s reduce our liabilities but the SIPs if adhered can create assets. The former choice is well known to us but the latter choice can make us well known by the wealth corpus we create at the end of our retirement corpus!!!!!!
So the rule of the SIP game is:
SIP : Start Early + Invest Regularly = Create Wealth Amply
How does it benefit?
>>> Builds Investment discipline and makes savings a regular feature in our life, which is very difficult to practice otherwise.
>>>Affordable & convenient given that SIPs are painless like our EMIs as they are silently debited to our accounts either thru auto debit, ECS or Post dated Cheques. Leave alone your wife, you will not know how you have gained the strength to save money regularly
>>> Helps in compounding your wealth.
>>> Fights market volatility as you not only invest money when the market is at its peak but also when the market hits low. Yes, the whole world will be hitting headlines of market volatility but your head lines will not skew because you appreciate that your investments are under going cost averaging.
>>> Fights Inflation, as hopefully markets are expected to provide better returns vis-à-vis bank deposits and there by we enjoy positive real returns. What’s that? Nominal rate of return enjoyed from these investments less the Inflation
>>> Helps plan for your financial goals for your car in 3 years, Children’s fees in Euro school in 5 years , Higher education expenses in the next 12 years, Daughters wedding scheduled after 20 years…sounds like a time machine or a fortune teller…but yes have you planned to fund them…if yes How…if No…please start SIPing money out of your bank account to investments.
>>> Helps Save Taxes under section 80 C provided we invest in Equity Linked Savings Schemes (ELSS)….
More on SIPs and ELSS in the ensuing posts….Good Day.
Thanks for visiting my blog.
http://www.invest-insight.blogspot.com/
Disclaimer: The author of this page is not a registered financial advisor, and you should not construe anything written here to be investment advise. You should consult a qualified broker or other financial advisor prior to making any actual investment or trading decisions. All information is a point of view, and is for educational and informational use only. No representation is being made that any investment made on the basis of data or information on this blog will result in profits. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments.
No comments:
Post a Comment