6 Reasons why SIP Mutual Fund can be Trusted

They say the best investment is to buy when ‘cheap’ and sell when the price is ‘high’. But for an average layman investor, who is not aware of the market trends and highs and lows, it might be a difficult proposition. Sometimes even the most seasoned investors fail in predicting the market volatility and face huge losses.

Hence, Systematic Investment Plans are the best way to invest. With an average risk factor, SIP’s generate a lot of returns and is one of the most efficient ways of investing. With money as little as Rs. 500 and a little bit of research, you can easily start a SIP. Below are 6 reasons that will make our argument stronger:

  1. Adjusting the SIP amount
    SIP gives great flexibility when it comes to the amount of investment. If you start at a SIP of Rs. 500 per month, and later on choose to put in more money in the same scheme. You can easily change the amount of the monthly investment. With SIP, you always can increase the SIP amount or start a new SIP under the same scheme.
  2. Pocket-friendly investment
    SIP’s allow you to start investing with as less as Rs. 500 per month. Depending on your financial situation, you can choose between monthly, weekly or quarterly investment plans. Additionally, there is no compulsivity to pay the amount every month. In case of financial emergencies, you can always stop or skip the payments without facing any penalty.
  3. Inculcates the sense of discipline
    One of the primary reasons SIP is the best is that it teaches a sense of financial discipline. SIP’s are directly debited from your bank account and, to some extent, do not depend on your wish or willingness. It ultimately helps you meet your long term goals and adds discipline to your investment journey.
  4. The power of compounding
    Due to the compounding effect, SIP’s generate the maximum profits when you’re invested in it for the long term. Mutual funds working on SIP are usually accumulated and reinvested the next year, leading to higher and excellent profits. For maximizing your profit earnings, it is best to start low but start early so that your investments have several years to grow.
  5. Doesn’t require timing the market
    Sometimes even the most seasoned investors fail to understand the market volatility. Investing in the market at the wrong time can lead to substantial financial losses. SIP’s don’t need you to predict the market and have little effect on the volatility of the market and are comparatively more stable compared to other forms of investment. The fixed amount is invested irrespective of the market conditions; if the market is at a low, you will get more units, and if it is at high, you will get lesser units.
  6. Complete transparency
    With the mutual fund industry growing leaps and bounds, the market’s working has been put under several rules and regulations. AMFI and SEBI have introduced several regulations that need to be maintained to protect investors’ interest. This had made the investors’ journey a reliable one and allowed new investors to pool the market. It has led to greater transparency in the market. Additionally, with the option of online portfolio tracking now available, it is even easier to keep track of all your investments.

Now that you’re aware of why you should trust a SIP, it is the correct time to invest in one. The earlier you start, the more are your benefits.

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