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Five Reasons to Start an SIP Right Now

mahindra-finance-author

by Mahindra Finance

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June 30, 2023

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4 mins read

SIPs are a tool that can help you invest a specific amount regularly in mutual funds over a period of time. Here are top 5 reasons to start an SIP now!

An SIP is one of the most popular forms of mutual fund investments today. SIPs promise very good returns on your investment, and help you accumulate wealth in the long run. Since an SIP is subject to market conditions, investing in the right stocks can do wonders for your financial growth.

Five Reasons to Start an SIP Right Now

Investment doesn’t have to be tricky. You may have heard of equities and bonds and exchange-traded funds. However, one of the best instruments to begin your investment journey with is a Systematic Investment Plan or an SIP.

SIPs are a tool that can help you invest a specific amount regularly in mutual funds over a period of time. With more than 2,500 mutual funds to choose from, to start an SIP can be a great way to inculcate an investment habit and amass wealth over the long term. It can help you meet long-term goals as well as fund short-term plans like a vacation. Before you start an SIP, know more about why SIPs are so great!

Here are the top advantages of an SIP you should know:

1. Best way to inculcate a savings habit

If you want to start an investing habit, opening an SIP account is one of the best routes to take. You can start an SIP online with as little as Rs. 500 in a scheme. It is easy to set an auto-debit option from your bank account, wherein a fixed sum is invested in a mutual fund of your choice on a regular basis. Putting your investment on auto mode with your bank will make sure that you save without any lapses.

2. The power of compounding returns

One of the biggest reasons why you should start an SIP is the power it has to multiply your money over time. Your money is invested in the market through mutual funds, thereby making it possible to generate higher returns. The returns on mutual funds are usually higher than the returns you get from a fixed deposit or the interest you earn on savings bank accounts. This is one of the greatest advantages of an SIP.

3. No need to time the market

For first-time investors, investing in the stock market can be tricky. You may not have the expertise to follow company performance and invest in high-performing stocks. By investing in mutual funds through SIPs, you eliminate the need to time the market. Also, since you invest over a period of time, rather than a lump sum mutual fund purchase, the overall cost of purchase is also averaged out. This is called rupee-cost averaging. If an SIP is purchased when markets are performing well in one month, you may get fewer units. But on the flip side, when markets fall, you get more units. Hence, when you start an SIP, the costs are evened out.

4. Naturally-diversified investment

A thumb rule of smart investing is to never put all your eggs in one basket. Another is to invest at different points in time for different goals. When you start an SIP online, you can do all of this. When you open an SIP account, you can put your money in different stocks, bonds, gold, indices or even commodities. One of the biggest advantages of an SIP is that SIP investments are naturally-diversified, thereby providing you good returns over the long term.

5. Helps with goal-based investing

SIPs are an excellent tool when you have an end goal in mind. Let’s suppose you want to buy your dream home 10 years from now. You have an estimated budget in mind. Many fund houses and online portals will help you calculate how much money you need to invest periodically to reach that goal amount. When you start an SIP online, you can save for a down payment or even complete payment to purchase your home.

Takeaway

SIPs are one of the most investor-friendly financial instruments in the market. Their benefits are numerous, from low and convenient investments to goal-based and disciplined investing. Through SIPs, you can amass good wealth over the long term. It’s definitely an instrument worth having in your financial portfolio.

With Mahindra Finance, you have the opportunity to start an SIP online from the comfort of your home, with the help of our top asset managers! Open an SIP account and reap the long term benefits of an SIP investment!

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