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Thursday, 29 July 2021

Teacher Readiness Survey 2021 Latest Circular

Teacher Readiness Survey 2021 Latest Circular

Everyone has dreams and goals—a new car, a bigger house, a family vacation to an exotic destination, and so on. But it is possible to achieve your dreams only if you work actively towards them. Investing in mutual funds through a Systematic Investment Plan (SIP) can be a simple way to help you achieve your goals. So, let’s look into the meaning of SIP, how they work, and how they can benefit you.

A Systematic Investment Plan (or SIP) is an investment mode through which you can invest in mutual funds. As the term indicates, it is a systematic method of investing fixed amounts of money periodically. This can be monthly, quarterly or semi-annually etc. When you invest steadily in this manner, it can become easier to meet your financial goals.

When you invest through a SIP, you invest a fixed sum of money in a given period. This amount lets you purchase a certain number of fund units. If you continue to do this for a long time, you get to invest in the fund during the highs and lows. In other words, you don’t need to time the market to make your investments. Market timing can be a risky proposition as one can invest at the wrong time. SIP investments remove this factor of unpredictability.

Having decided on the investment tenure and frequency, you can choose to automate your investments. Give a standing instruction to your bank to transfer the amount directly from your bank account into the mutual fund SIP of your choice, on a fixed date every month (or quarter) etc..

Every fund house requires investors to complete the KYC documentation process before they can start investing. You need to submit your identity proof, address proof and photograph. These days, the e-KYC option is also accepted. You can complete the formalities online without visiting the AMC.

The first step is to understand what you wish to accomplish through SIP investments. List down your financial goals. This is necessary because every mutual fund is designed with a specific objective. Identify your goals and look for funds that can help you achieve these goals.

Once you select a particular fund, choose the SIP parameters. Fill in the details for questions like:
Investment tenure
Frequency of investment (monthly, quarterly, semi-annually etc.)
Investment amount
Enter the relevant information based on your goals and financial situation.

There are two modes to invest in mutual funds: a SIP and lump sum. In a lump sum investment, you invest a large amount of money in the mutual fund at once.So, which is the better option: SIP or a lump sum? Here are specific parameters that can help you make the decision.

SIPs are regarded as the better way to invest if you have a limited amount to invest. It doesn’t matter whether you have just Rs. 500 or Rs. 1,000 to invest every month. You can begin your investment journey starting at Rs. 500.

In a lump sum investment, you invest the entire money in one go. This means you must invest at the right moment to maximize your returns. You can gain good yields if the market performs well. But the downside is you could end up with a significant loss if the market suddenly moves downwards. This can be a suitable strategy for experienced investors with a large amount of money. But if you are a new investor, sticking to SIP investments can avoid unnecessary risks.

In the long-term, SIP investments help investors take better care of their finances. When you invest a fixed amount of money each month, you can manage your money in a manner that can fulfil your investment. Your progress might appear slow, but when you look back after a while; you would have invested a considerable amount. The SIP mode can help you earn a large corpus slowly and steadily.

This sort of investment discipline doesn’t happen for lump-sum investments because most investors may not have a large amount of money to invest consistently.

So, based on your investment amount, risk appetite and experience, you can choose between SIP and lump sum investments. But overall, experts generally recommend investors to invest through SIPs rather than a lump sum.

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