Why Are Sips Suitable For First-Time Investors?

Investments play a significant role in our lives. They enable us to build our wealth strategically. They also come to our rescue in times of financial emergencies. Without them, it becomes challenging to establish our monetary goals on time. But for a first-time investor, specific Investment options could seem slightly intimidating. This is when a Systematic Investment Plan comes in handy. It is a systematic yet simple investment scheme.

It allows the investor to deposit small sums at regular intervals for a predetermined period. It serves as a hassle-free and convenient investment option for beginners. Here are other reasons why SIPs are suitable for first-time investors:

Easy to comprehend

As discussed, a SIP follows a simplistic investment structure. You only need to invest a fixed sum at regular intervals. You and the fund provider agree upon both when initiating the SIP.  This way, there is no confusion whatsoever.  

Reliable & safe

A SIP Investment is the safest investment option available. It is both managed and controlled by professional fund managers. You need not worry about security threats. Also, SIPs are not influenced by market fluctuations. They follow a rupee cost averaging structure that determines the average high and low amount based on your investment duration. Hence, they are highly reliable too.

Redeemable

Unlike other investment schemes, SIPs allow termination and withdrawals. It grants full redeemability of your invested funds. For example, you have invested in a SIP. For whatever reason, you wish to discontinue it and withdraw your money. In this case, your fund provider will disburse the total invested amount in your Savings Account. This way, you get full access to your investments.

Tax-saving perks

A significant chunk of investments gets deducted by taxation. But in the case of SIP Plans, the investor does not face this issue. As per section 80C of the Income Tax Act, such Investments are exempt from taxes. Hence, it is an excellent option for first-time investors. It allows them to reap the benefits of investing entirely.

Calculator

A SIP calculator is an online tool that helps investors compute their returns. This tool is readily available on most fund providing portals and the Mutual Fund app. It is highly beneficial to first-time investors who have little knowledge about investment growth.

Accessible

Nowadays, SIPs have become quite accessible. Several online banking portals and fund houses offer them at the click of a button. You need to meet their eligibility criteria and follow their application process. After this, you can start your SIPs.