Benefits of SIP

Benefits of SIP

There are many reasons to buy a mutual fund. I narrowed down few reasons that mutual funds can be a good investment choice for you.

1.Disciplined Saving:
Discipline is the key to successful investments. When you invest through SIP, you commit yourself to save regularly. Every investment is a step towards attaining your financial objectives.

2.Mutual Funds are Professionally Managed:
Many investors don’t have the resources or the time to buy individual stocks. Investing in stocks, not only takes resources but a considerable amount of time. By contrast, mutual fund managers and analysts wake up each morning dedicating their professional lives to researching and analyzing current and potential holdings for their mutual fund.

3.Mutual Funds Comes in Many Varieties:
A mutual fund comes in many types and styles. There are equity funds, debt funds, sector funds, balanced funds etc. The availability of different types of mutual funds allows you to build a diversified portfolio at low cost.

4.Start with just Rs 500:
Many mutual fund companies allow investors to get started in a mutual fund with as little as 500 rs.

5.Convenience:
It is simple to invest regularly in a mutual fund. Money can be pulled directly from a bank account and invested directly in the mutual fund. On the other hand, money can be withdrawn from a mutual fund and be deposited into a bank account.

6.Flexibility:
It is advisable to continue SIP investments with a long-term perspective, there is no compulsion. Investors can discontinue the plan at any time. One can also increase/ decrease the amount being invested.

7.Long-Term Gains:
Due to rupee-cost averaging and the power of compounding SIPs have the potential to deliver attractive returns over a long investment horizon.

8.Rupee Cost Averaging:
The equity market is volatile in nature and when you do an SIP investment, you would be buying more number of units during a slump and less number of units in a blooming market.

9.Power of Compounding:
The basic principle of Compound interest implies that small amounts invested over a long period of time would result in a larger return.

10.Acts as an Emergency Fund:
With One-click withdrawal SIP can act as an emergency fund for possible contingencies (like medical problem).