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How Do SIP Investments Help Ensure Financial Security ?

‘Mutual fund investments are subject to market risks. Please read the offer document carefully before investing.’

This is one of the most common statements that you must have come across, which relates to mutual funds. It states that mutual funds, by virtue of being traded in the market, involve a certain degree of risk, and so as an investor, you should be prudent enough while investing your money. However, there is no gain without taking a certain risk in life. And, so the same holds true for investments too.

While some of the investors try their hand to time the market and invest accordingly, some follow the ‘invest and hold’ strategy. There are many other theories to invest right, each of which works differently in different situations. Since timing the market consistently is a tough nut to crack, one way to continue investing through mutual funds is to choose a SIP (Systematic Investment Plan). Wondering what SIP exactly is and how it helps? Let’s tell you more about it down below.

What is a Systematic Investment Plan?

In case of mutual funds, there is a possibility of earning high profits, but a lot depends on how you make the investments. Since some of you may be risk-averse and may hesitate to invest a lump sum amount, mutual funds offer the option of investing in Systematic Investment Plans.

SIP is a smart way of building wealth gradually over time. As an investor, it allows you to invest small amounts instead of a lump sum payment on a periodical basis. You can invest weekly, monthly or quarterly depending on your investment capacity. In this way, it ensures financial security in several ways. If you’re a first-time or a relatively new investor, then you can choose a SIP investment plan by taking help from financial advisors like FinEdge, which is a renowned and reliable firm offering dedicated support.

Let us also tell you some reasons why investing in SIP can help you enjoy financial security in the long run.

  1. Easy to Maintain Investment Discipline

While many people think of a Systematic Investment Plan as only a way to maximize gains, it does much more than that. The most significant benefit of choosing SIP is to maintain investment discipline while you invest through mutual funds. Particularly if you follow an uncertain start-and-stop mode of investing, a SIP investment plan will put an end to the dubious practice.

The amount you choose to invest in a SIP will be debited from the linked bank account, thereby ensuring that you do not miss the investment cycle. As a result, you can create a large corpus over time.

  1. Achieve Long Term Financial Goals

It is imperative to build a solid plan to achieve your life goals. The same is also true for creating the requisite financial backup for realizing your wealth creation plans. For instance, you may have thought of building a corpus of Rs. 1 crore for your retirement to live the golden years of life without financial worries. If you do not know how to realize this dream, choose a SIP investment plan to make it come true. The goal-oriented process of SIP will ensure that you stay on the right track. If you also want to enjoy liquidity, you can choose to invest through open-ended funds via a SIP. This way, you can withdraw a portion of the investments during emergencies.

  1. Easy to Start Investing with a Small Amount

In India, middle-class people constitute a majority of the population. In most of the cases, the regular earnings of an individual are just enough to accommodate the expenses, which leaves less scope of investing a substantial amount. A SIP investment plan helps in this regard by allowing to invest a small amount through the chosen mutual funds. For instance, you can start investing Rs. 1,000 in a mutual fund scheme to fulfill a goal that is fifteen years away. The minimum amount you can invest in a SIP varies from one scheme to the other. Make sure you consult with a financial advisor before you start investing.

Invest Right with the Help of Financial Advisors

SIP investment plan is a smart way to achieve your wealth-creation goals by making regular investments over time. However, selecting the right scheme often becomes a difficult task. It is here that renowned financial advisors like FinEdge, help a great deal. With their long-term experience and knowledge of investment planning, they can guide you to invest in the right schemes amidst the ups and downs in the market. So, invest in a long-term SIP investment plan to reap good returns while staying financially secure at the same time.

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