‘In investing, what is comfortable, is rarely profitable’ – Robert Arnott
Investment – when people hear this word, the first thing that comes to their mind most of the times is to go for a fixed deposit or just invest the money in a bank account. Well, the choice is understandable because these two options involve the least amount of risk or, rather, no risk at all. Having said the above, the returns in the same way are not very attractive. If one can sacrifice that one dress from Zara in a month or not go on that luxurious vacation to invest for the future, it will reap good returns, considering the money is invested in a good mutual fund and for a long period of time. As said above, if it is comfortable, it will not be beneficial.
Rajesh and Sonia, a 50 year old retired couple, were barely able to make ends meet after retirement as they had limited savings, most part of which was spent on their son’s foreign education. Had they planned the life after retirement earlier and thought to invest in SIP regularly,they would have been able to reap the benefits during the old age instead of worrying about where the next meal will come from. Financial planning is imperative for each person and implementation of this planning is what can secure one’s future.
SIP – Systematic Investment Plan is a way of investing in mutual funds where one can invest a particular amount of money in a selected fund at regular intervals of time in order to get a good corpus at the end of a long time horizon. A small amount of Rs 1,000 invested monthly in mutual fund SIPs can get you a corpus of approx Rs 11 Lakhs after 20 years against your investment of Rs 2.40 Lakhs only (Assumption of 12.5% annual returns).
Likewise, if you invest in SIP Rs 5,000 or Rs 10,000 a month, the corpus value could be approx Rs 50 Lakhs or Rs 1 Crore respectively after 20 years.
Before you invest in SIP, plan your SIPs using our Systematic Investment Plan Calculator
Rajesh and Sonia did not have this awareness about how to invest in SIPs when they were earning a good amount as salary every month, otherwise they would have saved or earned more than enough to support them after retirement.
Regarding investing in Mutual funds or SIPs or other aspects related to this, there is always help available by the trusted mutual fund advisors who will guide the investors as to when, how much, where to invest in order to get the maximum returns. You can contact us to invest in SIP –
Now, investors do have a habit of delaying the time of starting the investment or are unable to understand when they should initiate this. There are certain reasons why now is the best time to invest in an SIP –
- Smaller amounts, greater returns – As said earlier, the minimum amount in an SIP is as low as 1,000 per month. In fact, in case of ELSS funds, it is 500 INR per month(with a lock-in period of 3 years). So, students who get pocket money can also opt for this form of investing money and gradually increase this monthly amount once they start earning. If the investment time horizon is long, then the returns are expected to be attractive as well. One needs to inculcate this habit of regular investment in order to reach their financial goals.
Read what are the advantages to invest in SIP
- Market fluctuations not a concern – One should not worry about market fluctuations and not even try to time market entry or exit. It is almost impossible for a layman investor to predict the movement of the markets. Hence, any time can be a good time to start SIP investment as long as one has a long term investment horizon is clear about his/her investment needs.
As markets are and will ever remain uncertain, focusing on your long term investment needs is more important than market levels and therefore, even if the markets are at a high level, this could be the right time to start investing in SIP.
Did you know which are the best mutual funds for your SIPs
- Knowing the risk taking ability – If you know your risk taking aptitude while investing in SIP, it will definitely help you to choose the type of fund you should opt for. In case you do not know that, you can always contact a financial advisor and will be guided as to which fund should be selected.
For example – if you can take high risk, you can invest in mid & small cap funds and diversified equity funds. However, if you cannot take high risk and okay with taking only moderately high risk, large cap funds and balanced funds could be good choice. Similarly, those with low or moderate risk can invest in debt mutual funds. So, now, is the best time to start investing in SIP because earlier, the better.
Read how should you select mutual fund schemes for your investments
Also read what should be your optimal asset allocation and why it is important
- Systematic and non-cumbersome – Once you inculcate the habit of regular investment in SIP, monthly or quarterly, it becomes a systematic and regular method, as the name suggests. Once the AMC, fund, amount is chosen and the scheme is initiated, the money is debited from your bank account at the chosen date itself without any trouble being taken by you. This continues to happen every month, till the SIP is discontinued. Hence, no physical presence required to invest, no need to stand in long queues, it all happens in a jiffy and is a safe form of investment. A minimum of five years is always suggested by mutual fund advisors to invest in SIP and one should do that in order to reap the maximum benefits out of it.
Check how SIPs have created wealth in the last 10 years
Had Rajesh and Sonia known these fantastic merits of investing small amounts in SIP and making good money out of it, they would not have had any financial problems. Do not be like Rajesh and Sonia. Be aware of investing and start thinking to invest in SIP now. It’s the right time!