Systematic investment plans (SIPs) are very different from traditional investment plans. They have taken the market by storm as mutual fund investments have now come within the reach of low-income investors. These plans give high returns if the pattern of investment is followed properly. SIPs are small investments made on a monthly basis in mutual funds. These plans work on rupee cost averaging formula and provide remarkable returns. Top 5 reasons to invest in systematic investment plans in mutual funds: 1. Power of compounding – Secret of increasing wealth and reaping good returns in investments in case of SIPs is to start early. The longer you stay invested, it compounds your money and can give you unbelievable returns. 2. Flexibility – SIPs are very flexible, be it investment or withdrawal. It can be started with as low as Rs. 500 and as high as Rs 5000. Redemption of the same is also easy as you can redeem full or partial amount. Redemption facility is available online for most funds and you can get the desired amount within 4-5 working days. 3. Choice of funds and less risk – Depending on the risk appetite of an investor, SIPs are a good choice because there are multiple funds to choose from, including tax planning funds. SIPs also minimize your risk in investments as the plans average out your cost of investment on a monthly basis. 4. Disciplined Savings and Direct Debit – SIPs are small portions of your savings and the same can be debited from your bank account on a specific date. This enables a disciplined habit of saving. 5. Long term goal and transparency – The investment and returns are transparent with value published each day. Investing long term can help in achieving future dreams and aspirations.
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Author : 5nance |
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