Why SIP Investing in Mutual Funds is the Best Way to Go
Investing money smartly is essential because earning money from the primary source of income is not enough. Many people work hard towards earning money, but that might not be adequate to lead a quality life.
When it comes to investing, one of the most preferred choices is Mutual Funds owing to their lucrative returns. When they were first introduced in our country, there was a lack of awareness. However, several platforms now provide the required resources and the option to invest in the best performing mutual funds.
What is SIP?
A systematic Investment Plan, or SIP, is one of the most popular mutual fund investment methods. It means investment in mutual funds regularly with a fixed amount in a disciplined manner depending on the financial goals.
By opting for SIP, one has the potential to create long-term wealth, and this approach suits those who have a regular cash flow or a fixed salary. But for this, choosing the best mutual funds for SIP is essential first. Furthermore, as the term indicates, it is a systematic method of investing fixed amounts of money monthly, quarterly or semi-annually.
Why SIP Investing in Mutual Funds is the Best Way to Go?
Keep in mind that idle money in your bank account or even your locker is an opportunity lost. So, one of the smartest ways to do so is to invest in a SIP after choosing the best mutual funds for SIP. This is because when you opt for this route, you get to invest in regular intervals every month that will automatically turn into savings before you spend your hard-earned money.
Unlike specific investment schemes such as Public Provident Fund (PPF) or others, SIP comes with tremendous flexibility as these are open-ended funds to be withdrawn as per your choice. This means they do not have a fixed tenure, and one can either withdraw the full or a partial amount without incurring any losses.
Rupee Cost Averaging
This means one buys more units when the market is low and more when the market is high. This is because of the inherent feature of SIP, where at every market correction, you will buy more, reducing your cost of investment and higher gains.
Power of compounding
This scheme works on the principle of receiving compound interest on their investments. This basically means that a small amount invested for a long time fetches better returns than a one-time investment.
How to invest in SIP?
- Be it any investment, there should be a proper goal in mind, whether it is short-term, medium-term or long-term. Remember, the longer the duration, the higher the returns.
- Shortlist the SIP best mutual funds which are in the loop with your financial goals. One can also compare different SIPs and select the best.
- Sign up on the Bajaj Finserv application after entering your personal details, and you can easily invest here.
(I’m not promoting any brand/organization here. Just sharing my personal experience.)
When I initially planned to invest in SIP, like any other person, I went on the search engine and searched for the ‘best mutual fund to invest today’. But this is not the way to go. Properly analysing every factor is mandatory before you put in your hard-earned money.