Do you first meet all your monthly expenses and then save the money left over, if any at all?
If that’s the case, then the number of times you must have been able to stay in the green may have only been a handful, right? If you don’t like living pay check to pay check and want to start building wealth, you should consider opting for a Systematic Investment Plan (SIP) in mutual funds.
Let’s understand why people don’t save
Humans have the natural tendency to overspend – to buy more and more products for themselves and their families to fulfil different needs and desires. If you are entirely dependent on your monthly earnings without having a well-thought financial plan, then it could get challenging and uncertain for you in the long run.
So, what can be done for a financially secure future?
Consistent income combined with intelligent investment decisions increases the likelihood of a financially sound future. If time limitations are at hand and in case of an inability to make regular investment decisions yourself, an SIP investment can work wonders for you.
Benefits of a Systematic Investment Plan
Due to the several benefits of systematic investing, SIPs have become an investor favourite in the country. Let’s go over the various benefits of investing in auto mode at the start of each month.
- Inculcates financial discipline
When you decide to invest manually at consistent intervals, you will find that it is not easy to implement over a longer time frame. But if you could invest automatically in mutual funds plans, would it not free you up from a tedious task? Often, a different task takes investing off our minds, leading to the opportunity cost of the missed benefit of compounding.
- Helps budget your expenditure
It is imperative to save before you spend and not do it the other way around. At the start of every month, when you allocate money to an SIP mutual fund, you have only the balance amount left in hand. This means that you will have to find a way to meet all your expenses with the amount leftover – thereby helping you stay on track with your budget at all times.
- Prevents you from timing the market
When you invest consistently, you do it irrespective of the market scenario. That means that you invest both during a bull phase or a bear phase, thereby allowing you to benefit from rupee cost averaging.
- Has a low investment requirement
The monthly investment amount required in SIPs is low, which won’t take a toll on your pocket. When you keep investing small amounts over a long period, your money gets compounded, giving you a significant time advantage.
- Offers online convenience
Technology has remodelled the way we work and invest our funds. Many platforms provide MF Scheme online facilities making it more convenient for investors. Your SIP investment is just a click away!
Final thoughts
SIPs help inculcate the discipline of investing and allow investors to grow their finances efficiently. Even once you have started investing in a MF scheme, you have the option of transferring your funds to another MF scheme with a Systematic Transfer Plan (STP). You can also consider reaching out to an experienced and trusted financial advisor to guide you on the path of auto investing.
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