Benefits of Systematic Investment Plan(SIP)
Saturday, July 4, 2009 11:41Posted in category Investment
As I had already shared, SIP is a method of investing a fixed sum of money regularly in a Mutual Fund Scheme. It is quite similar to regular saving scheme in a bank account like a recurring deposit. The only difference is that there are good chances of getting a better return than a bank deposit when investing in stocks.
Benefits Of SIP
- SIP offers you tax benefits which could come in handy if have to pay income tax.
- Regular Investment makes you disciplined in your savings and also leads to wealth accumulation.
- SIP comes with a locking period, so even if you wish to spend you cannot as the funds are locked and cannot be taken out.
- In SIP, invest as low as 500 or 1000 rupees. There is no need to worry if you do not earn a lot of money as you can still be a market investor with as low as 500 a month and even that would come up to be quite a good sum after a few years.
- In SIP, you invest in mutual funds where your investments are managed by market experts and professionals who have good knowledge in this field, so you have a chance to do much better than that of investing yourself alone.
- In SIP, you will be purchasing units at all phases of the market, high or low, depending on that you get the units share and so you dont need to worry about market going up or down. But just have to wait for the right time to take out your money after the scheme is over and no more deposits are being done. Thus your investments get averages out at the end and the loss is very limited which isnt the case when you invest all at once.
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Raj says:
July 4th, 2009 at 12:16 pm
good article thnx
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Mayank Reply:
July 4th, 2009 at 1:38 pm
Thanks
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Rahul says:
July 4th, 2009 at 1:36 pm
I have been investing about 3000 every month in Birla Sun Life mutual fund
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Mayank Reply:
July 4th, 2009 at 1:39 pm
Glad to hear that. Birla has been performing well it seems. I have quite some invested there too and the returns are pretty decent. Although I am going for ICICI Prudential this time, would be a good comparison.
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Ajith says:
July 4th, 2009 at 1:57 pm
Good to see you back buddy… Looks like you are into a different set of topics now
As for the SIPs, I have a few of them with HDFC and Reliance funds. In fact, the growth fund helped me to balance out my losses in the last few months due to market downtime
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Mayank Reply:
July 4th, 2009 at 10:49 pm
Yeah, last time due to formatting the server, I lost everything, I didnt know that the backup of this site isnt made when I took the server backup, as I was mostly worried about my other main site.
My first investment was in hdfc mutual funds only, starting with 3000 per month and another one was in Birla 3000. I dont know if it was growth fund, but it was a wrong time to start the investment, 2007 last quarter when the market was as high as 23000. I sold it recently and only managed to get whatever I invested, as 3-4 months were bought at extremely high prices before market crashed. Plus due to some issue, hdfc stopped in a year, but birla is continuing and is performing pretty nice.
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mercerd says:
July 17th, 2009 at 2:58 pm
interesting material, where such topics do you find? I will often go
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prashant says:
August 11th, 2009 at 11:56 am
Hi I have invested in SIP which has locking period of three years,now i want to take out the money i want to know when is three years calculated from the first month of investment or the last month of investment
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Mayank Reply:
August 12th, 2009 at 8:07 am
Like if you invested in August 1st, then 3 years later July 31st, your 3 years locking is over. Also remember it is not compulsory to take out the money that time, let it stay and when the market is at a good level and you see good money in your mutual fund account, take it out.
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