Benefits of SIP in Mutual Funds

Benefits of SIP in Mutual Funds By Investmentz

Introduction• Systematic Investment Plan (SIP) has become one of the most popular ways of investing in the equity markets, especially to beat the inflation rates over the long run. SIP allows an investor to invest a small and fixed amount of money into a mutual fund scheme. Through SIP, an investor can invest money at regular intervals such as monthly or quarterly for a continuous period of time

• Investors’ financial goals are generally divided into long-term and short-term goals. While international holiday, vacation, or buying luxury items come under short-term goals, buying own home, planning retirement funds, and children’s education come under long-term goals. Enrolling for a mutual fund SIP is one of the easiest ways to benefit from the effect of compounding of money over a long-term horizon to meet all your short- term and long-term goals

Following are the major benefits of investing in mutual fund SIP:• Regular investing• Maintaining discipline in your asset allocation• The power of compounding• SIP allows investments in small amounts

Regular investing• SIPs allow you to invest money into various mutual funds at regular time intervals such as monthly, quarterly, or annually

Maintaining discipline in your asset allocation• Regular investing creates a good investment discipline, which will help you largely in attaining your financial goals at the end of your investment time horizon

The power of compounding• SIPs help you largely in terms of compounding the value of money that you invest regularly. In simple words, through the power of compounding, they help you convert smaller portions of money invested over a longer period into a larger corpus at the end of the investment horizon

SIP allows investments in small amounts• One of the stand-out features of SIPs is that they allow you to invest in mutual funds for amounts as small as Rs. 500 or Rs. 1000 per month.• One of the best ways to start SIPs is to contact a financial professional expert. They will not only provide you with the best SIP options but will also help you align your SIP investments with your financial goals through a good diversification strategy

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