Nearly two decades ago, Franklin Templeton introduced Systematic Investment Plans (SIPs) to India. Since then, SIPs invested in reputable funds have produced impressive returns and helped investors become wealthy. SIPs provide a straightforward and methodical approach to long-term wealth accumulation. With the exception of producing better risk-adjusted returns than bank recurring deposits, mutual fund SIPs function similarly to recurring deposits. Retirement planning with mutual funds Systematic Investment Plans (SIP) has several advantages: -
SIPs' greatest benefit is that they eliminate the need to time the market. Accurately predicting the behavior of markets is impossible. One is invested at both market highs and lows when they make regular investments, such as once a month. SIPs, which average investment costs, perform well in erratic markets.
A disciplined approach to investing is fostered by SIPs. You can create a corpus for your long-term financial needs by investing a set amount of your regular savings. Uninvested money is frequently spent on items you might not need.
Even if the broader index doesn't give any returns for several years, the SIPs will be able to give you better returns than fixed income instruments because of high volatility in the market. That is the beauty of the SIPs. Due to non linear movement of the index, you keep buying at lower levels also and that makes your returns superior to fixed income instruments.
If you start investing in mutual fund SIPs and the markets start falling, then it is blessings in disguise and *the best* thing that can happen to you. You know why; It is because you keep accumulating the more units at lower price. Ultimately, markets have to go up in long term because that is the inherent characteristic of the stock market.
Volatility is an inherent characteristic of the market. SIPs help mitigate the impact of market fluctuations by spreading investments over an extended period. Through regular investments, investors benefit from the "Rupee Cost Averaging" approach, where they buy more units when prices are low and fewer units when prices are high. This strategy helps reduce the risk of making large investments at unfavorable market conditions.
SIP is better as it averages out the purchase cost rather than lock up the money at a particular NAV as in lump sum investments. SIP ensures investments are not hurt too much by market falls. You convert market falls into investment opportunity by buying more units.
Recently SIPs have become hugely popular in India with around Rs 19,000 crore flowing into the market every month via SIPs.
SIPs in equity funds over the long term have created wealth for the investors. SIPs benefit from the power of compounding, and therefore the earlier we start our SIP, the greater is the potential for wealth creation. However, it is important to select a good fund for our SIPs. Your financial advisers can help you select a good fund that is suitable for your risk profile. As your risk profile changes over time, you should re-balance your portfolio to align with your risk profile.
We, at *INVESTOR FIRST* can manage your mutual fund portfolio if you so desire. We have different plans for different people as per their risk appetite and goals. People who are fixed income centric or have moderate risk appetite can be advised and invested accordingly.
The process of investment will be online only. It will take 1 or 2 days for registration with us. We will give you an *app* for monitoring and execution of your mutual fund investments. If you so desire, you may please contact us at the following address :
Head Office : 2nd Floor, 159/129/96, Sri Krishna Tower, Near Hotel Ramada, Ballupur Road, Dehradun-248001, Uttarakhand.
Contact Numbers: +91-9164046333 (personal), +91-8410116967(off), +91-6397808084(off), +91-1353520386(off).
Mail Address: sangam157@gmail.com, info@investorfirst.co.in
Regards,
Col Sanjay Datt
Associate Business Partner,
Investor First
*REFERENCES*
https://amc.ppfas.com/media/quotes/the-power-of-sip.php
https://www.advisorkhoj.com/articles/Mutual-Funds/How-Mutual-Fund-SIPs-have-created-wealth-over-the-last-15-years:-Large-Cap-and-Diversified-Equity
https://www.cnbctv18.com/finance/the-power-of-sips-smart-investing-in-indias-current-market-16735471.htm
*DISCLAIMER:* The opinion expressed above is our personal opinion and in no way recommendation of buying or selling. You must consult your financial advisor before making any fresh investment in equity market. Please also note that past performance of funds does not guarantee future returns.
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