Why SIP Investment is Best Way to Invest?

Did you know that according to AMFI, mutual funds in India currently have 5.05 crore SIP investor accounts? Well, this isn't surprising. After all, it is the easiest way to invest in mutual funds and generate wealth over time.

Today, you can conveniently start investing online with the fund of your choice. You can choose how much you want to invest, set the frequency, set up auto-debit mandates, and monitor your portfolio online. You can sell your mutual fund units whenever you like, stop investing at any time, and even start a new plan. And so, an online systematic investment plan allows you to be in control of your finances and remain stress-free.

But wait! This is just one of the many reasons countless Indians swear by SIPs. Want to learn more about how they ensure smooth sailing as you achieve your financial goals? Keep reading.

Small investment amount

Most mutual fund schemes allow you to get started with as little as Rs. 500 per month. So, if you have just started earning, it is the best way to invest in mutual funds for you.

High flexibility

If you started with a small amount, but your salary has since increased, you can increase the investment amount. You can even start a new SIP in the same mutual fund scheme.

Additional Read: How SIP Returns Helps in Meeting Your Long-Term Goals

Instils investor discipline

Most investors are quick to start but often struggle to keep the investing going for a long period. But, a systematic investment plan can make you more disciplined.

The best way to start SIP and make regular investments is by setting up an auto-debit mandate. In this way, your amount gets deducted automatically, and you don't have to worry about missing instalments.

Rupee cost averaging

A systematic investment plan eliminates the need to time the market before entering. Why? You regularly invest a fixed amount, irrespective of the market conditions.

Thus, you will get more fund units if the market is down and fewer units if the market is up. In this way, you reduce the average cost of purchasing your mutual fund units. Hence, in the long run, the average cost of purchasing the units is less than making a lump sum investment when the markets are running high.

Power of compounding

If you select the growth option when you start investing, the returns you generate are added to your investment amount. This total amount is then reinvested. This results in the compounding effect, which allows you to enjoy higher returns in the long run.

Addition Read: Difference Between SIP and Mutual Fund

Safe and transparent

Every fund house and AMC has to abide by SEBI's rules and regulations. So, if you are a beginner investor, let go of your worries and rest assured that it is safe to invest in mutual funds online through a systematic investment plan.

Key Takeaways

• Start SIPs with as little as ₹500 per month, making them accessible for beginners.
• Easily increase your investment amount or start a new SIP as your income grows.
• Auto-debit mandates ensure consistent contributions without the risk of missed payments.
• Regular investments through SIPs help lower the average purchase cost over time.
• Reinvested returns generate higher long-term gains through the power of compounding.
• SIPs are safe and reliable, as all fund houses are regulated by SEBI.

Frequently Asked Questions

How to start an SIP?

You can start a SIP online directly through an AMC, offline through a mutual fund distributor/agent or by opening an account with Tata Capital Moneyfy.

Are there any conditions to start SIP Insured?

Yes, AMCs impose conditions for investors wanting to start SIP insured. These vary between companies and can include terms such as the maximum number of defaults, redemption unit limitations, etc.

Can I make a lumpsum investment along with SIP?

Yes, you can make a lumpsum investment along with SIP. You can start a SIP while also purchasing additional units simultaneously.