Benefits of Investing through SIP (Systematic Investment Plans)

Investors, across the world all have one thing in common and that is wealth creation. There is a constant desire to reap profits from one’s saved investments. There are plenty of lucrative financial instruments where investors may have their funds deposited. Some of the various options include debentures, bonds, commodities, mutual funds, real estate and stocks. However, the rate of return is unpredictable for these instruments and there is a constant variation in the amount of risks that are involved in the same.

While there are many investment instruments that are available in the market, SystematicInvestment Plans (SIPs) remain one of the most critical components to one’s investment/financial portfolio. These vehicles, which are offered by mutual funds, refer to those investments which help investors inculcate a habit of regular saving. It inculcates discipline in investors, where SIPs help to negotiate volatility in the long run.

 Similar to a recurring deposit that is held with a bank/post-office, an investor has to allocate a certain (fixed) amount of money, every month in the plan. While the minimum amount can be as low as INR 100, this amount can be changed as per the investor’s preference. The frequency, with which the deposits are made, is either on a monthly or quarterly basis.    

So, many investors may often wonder, what the actual benefits of having their funds invested in this financial instrument over any other instrument. They are especially known for the fact that the rate of return on the funds that you invest in the stock market beat the rate of inflation. This means, that there is ‘real-value’ accretion that occurs over a long-term basis. So, isn’t this exactly what investors are constantly seeking?

It is easy to invest in SIP plans online, where investors can also make use of online tools which help to facilitate the process. One of the most ideal online tools (calculators) that can be made use of is the SIP calculator. The online calculators are freely available online via different financial websites or trading portals. All that is required from the investor’s end is to enter in certain key details in the online calculator.

Some of the details include the name of the mutual fund, the scheme; the investment amount (INR), the frequency (monthly/quarterly) and the commencement date and ending date of the plan. By clicking on the ‘calculate’ button on the page, it is only a matter of a few minutes when the SIP calculator gives you a clear plan of an investor’s investment goals so as to ensure maximum benefits.