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Why SIP is consider best route to invest in Mutual Funds-


Investing in Mutual Funds (MF) has suddenly become the new rage among investors. Good returns and investing in funds suiting your risk taste is something that has caught the attention of the investors lately. Perhaps, the ones with good risk appetite are more inclined towards making a hasty investment in mutual funds. Now, if you are perplexed on how to go about investing in MFs, then this piece of writing should help in sailing your boat to its right destination.

On a regular basis, huge write-ups on Systematic Investment Planning (SIP) appear in financial papers, magazines, websites, etc. explaining how SIP is an excellent method of investing in stocks. However, it is surprising to know that many are still unaware of this unique investment planning. To begin with, lets understand the concept of mutual funds.

In simple terms, a mutual fund is a special type of company that pools together money from many investors and invests it on behalf of the group.

Mutual Funds raise the money by selling shares of the funds to the public. It is quite similar to any other company that sells stocks to the public. Funds then take the money they receive from the sale of their shares along with any money made from previous investments and use it to purchase various other investments, such as stocks, bonds and money market instruments.

You have the option of investing in mutual funds in lumpsum or through Systematic Investment Planning. SIP is just a method of investing in MFs. It basically makes the payment of money more flexible. You have to pay the fixed amount at fixed intervals. In plain words, it means to manage your investments systematically.

Why SIP is considered to be an ideal way of investing ?

1. SIP is advisable because it an impossible task to time the share market. The NAVs of the fund are not constant since it keeps changing. It is for this reason that it is recommended to invest via SIP route. The loss that you could have probably suffered gets minimized to a greater extend.

2. Second of all, SIP inculcates a disciplined practice of investing. It forces you to set aside a fixed amount.

3. Your risks get even out. When the market travels its southward journey, the costs of the units are low, so you can buy more units. Similarly, when the markets are at its all time, the units become expensive. SIP helps you out with the right kind of investment.

4. The longer you stay invested; SIP works increasingly in your favour.

Market experts advise to stay invested for atleast a period of 3 years to get the maximum benefit from SIP method. This enables you to arrest all the ups and downs that you might have faced while being a part of the market.

Parag Nesarikar


Write your Comments:

  1. Have you started your SIP monthly savings linked to your financial Goal?

  2. Why SIP is the best route to be a millionaire?

  3. Whats your experience in Mutual fund Investment?


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