Investments are the best way to grow wealth and fulfil your future needs. As savings are never enough, money never grows when kept in your Bank Accounts and pockets. Increase it by investing in financial assets and classes, providing decent returns as savings. As your responsibilities increase, you need to plan a financially secure future.
A Systematic Investment Plan is a mode of Mutual Funds Investment for the long term. You invest periodically every month or quarter throughout the 10 to 15-year tenure. The fixed amount of money can be as low as Rs. 500. By this route, you invest in a time-bound manner without worrying about market dynamics. These benefit over the long term due to average costs and compounding.
Benefits
As you get ready for work or even decide to take a break from it, the investment plan is constantly working towards your goals and helping you keep your success in progress. If you are keen on investing, know these benefits:
Power of compounding
Regular investments in a SIP scheme lead to compounding. It means the investor gets more units when the scheme’s Net Asset Value is low and lesser units when it is high. You earn interest on your interest as it gets added to the original amount and is beneficial for long-term wealth creation.
Rupee cost averaging
Investing through Systematic Plans gives you the advantage of rupee cost averaging. It means you get more units when the scheme’s Net Asset Value is low and vice-versa. It brings down the average unit cost over the long term. Investing in Mutual Funds online has become smoother, thanks to the Mutual Fund app.
Flexibility
As an investor, you get the flexibility to choose the amount, duration and plan interval. You can also modify the amount, change the interval according to your needs, pause, or stop the investment. You do not strain your finances or compromise your needs by investing small amounts regularly.
Investment discipline
Investment through SIP Plans teaches the value of disciplined investing in an investor as they are committed to investing a specific amount for a fixed period which is essential in long-term wealth creation. There is no need to time the market or worry about the potential returns since you invest small amounts.
Power of starting early
The earlier one starts saving and investing regularly, the easier it is to achieve your goals. For instance, if you start investing Rs. 5,000 monthly at 25, a corpus of approximately Rs. 2.76 crore is generated at the time of retirement. If you wait five more years, till 30, the approximate corpus generated falls to Rs. 1.54 crore. There is a difference of Rs. 1.21 crore, the cost of delaying the plan.
Performance
The value of a Mutual Fund Investment depends on the performance of the securities held by the company. When the portfolio performs well, the investments grow and vice versa.
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