We are slated to celebrate our 75th Independence Day!!! As a country, we have moved to a trajectory of ‘atma nirbhar bharat’ in many facets of upliftment of the poor and many technological developments. With social freedom, we also need to aspire to gain financial freedom. Freedom from dependence on money to realize your dreams and goals, freedom from remaining hostage to working for money for longer life and freedom to live life on your own terms.
Systematic Investment Plans (SIPs) have come out as a blessing in disguise for the common man, the inability of not being able to accumulate big money to invest and make more, has been addressed through this route of small amounts being invested regularly ending up creating long-term wealth, in actual realising financial freedom for many.
Despite heightened volatility in debt and equity, the mutual fund (MF) industry is witnessing increased interest of retail investors contributing to the SIP book which crossed the Rs 12,000 crore mark and surpassed 5.5 crore folios at the end of June 2022, from Rs 3,122 crore and 4,335 folios in April 2016. This trend shows the investors are more evolved and taking the path for wealth creation through the SIP route
The Mutual Funds Sahi Hai campaign and other financial literacy initiatives undertaken by the industry and various fund houses are now showing results with increased participation of retail investors through the MF route and to be precise SIP route.
Road To Financial Freedom
Creating wealth is a matter of planning and practice, setting specific financial goals, and pursuing these goals with focused actions. Investing through SIP is one such action and it becomes a habit to save regularly, automating savings into investment.
While SIP has become a method of investing to accomplish financial goals, financial freedom too has become a buzzword.
Life gets easier when one gains sound financial skills and knowledge. L-I-F-E can be described as Living In Financial Empowerment when you have appropriate financial goals and you have taken action to achieve those goals. Otherwise, LIFE can become Living In Financial Entanglement
Lack of financial planning, many people struggle with issues like growing debt, financial emergencies, spending exceeding earnings, etc. No matter whether you are financially savvy or not, adopting to automating savings into investments through SIP will put you on the path to Financial Freedom.
Follow basic steps for financial freedom like having specific financial goals, preparing a budget, restructuring debt, creating an emergency fund, distinguishing between needs and wants, starting saving at the earliest stage of life, investing with prudence, and allocating assets wisely.
SIP: The Trusted Companion
SIP is a simple, convenient way to invest regularly for a long period, keep investing during both ups and downs of the market would pave the way to create wealth leading to financial freedom.
The pandemic has taught us why we need to be financially prudent and save as much as we can. It also taught us that we not only need to save for our goals but also help the society around us. One needs to create an emergency fund of 6-9 months of monthly expenses, continuing investments to accomplish financial goals, and also contribute to philanthropy.
SIP can become a tool for us to create all our three needs of Saving, Investing and Philanthropic contribution.
Saving: Invest regularly in liquid/debt funds to have an emergency fund/contingency fund.
Investing: Invest in multiple SIPs in equity for accomplishing multiple financial goals. Invest in Flexi cap to take advantage of the entire equity universe across market capitalisation (large cap, mid and small cap) and across sectors. To take advantage of blue-chips with a proven business model, strong balance sheet, and commanding moat one can invest in large-cap funds. To tame the market volatility you can invest in a Balanced Advantage Fund.
Philanthropy: Create a separate account of SIP to contribute to society as part of the philanthropic contribution. For instance, instead of paying a full monthly salary to your domestic help or driver, you can start a small amount of SIP for them. This will help them in securing their financial future. This is the easiest and most convenient way to do philanthropy for our society. With this, you will not only accomplish your financial goals but also contribute well to the people/society around you. This is the true financial freedom that scriptures prescribed.
Mutual Fund Investments are subject to market risks, please read all scheme related documents carefully * Investor Education initiate from Aditya Birla Sunlife Mutual Fund
K S Rao, Head - Investor Education & Distribution Development, Aditya Birla Sun Life Asset Management Company Ltd