Rome was not built in a day, goes a popular saying. Same is true for most of our life goals. Children’s education, a dream house, and savings for retirement are all accumulated over the years assiduously and not in one go. Here is where the importance of saving comes in. And not just plain vanilla saving but a saving that keeps up with time and inflation.
What is Systematic Investment Plan (SIP)?
As the name suggest, an SIP is something which brings a systematic approach to savings and builds up a corpus for your life goals over a period of time. One can start an SIP for as low as Rs 500 per month through a mutual fund of your choice.
What makes SIPs essential?
SIPs not only help you beat volatility by remaining invested in the long run but also make you a disciplined and patient investor. The second advantage an SIP offers to investors is by creating a sizeable corpus over the years even if the contributions made are minimal.
How can you start investing in SIP?
The process towards investing in SIP is quite simple. After zeroing in on a particular scheme of a fund house, you can mandate your bank to debit certain sum from your account towards investment through Electronic Clearing Service (ECS). You can also opt for post dated cheques (at least 12).
Other things to keep in mind while choosing an SIP?
- Choose an amount with which you are comfortable.
- Ensure you have enough money on SIP date.
- It usually takes 30 days to begin or terminate an SIP. So plan accordingly.
- If you have investments in two different schemes, choose different dates for investment, so that you may get better returns by averaging out.
