Why investing through SIPS in mutual funds makes SENSE
“A penny saved is a penny earned” – I must have been around 6 when I first heard this, while getting a piggy bank as a gift. As a child, saving money is easy – just drop coins into a piggy bank. However, as the childhood piggy-bank savings evolve to adulthood investments, it is not only exciting but sometimes downright scary to choose from the vast range of investment options; and more so, when you are starting on your personal financial journey.
So what is the right way to start investing?
The answer is simple enough. Start with the first pay-check and invest 15%-25% on savings post expenses. Increase the amount every year or whenever your income goes up and Stay Invested – these simple, infallible strategies make for a sound, financially secure life. And for staying the course on your personal finance journey, investing through mutual funds can help build wealth while mitigating risks, especially when you are investing regularly in these funds through Systematic Investment Plans (SIPs).
Investing through mutual funds makes SENSE.
What is your Status as an investor?
Are you an amateur, a novice or a veteran? No matter what your investor ‘status’ may be, investing through Mutual Funds ( MFs) means you don’t have to rely solely on your knowledge. You can gain from expert Fund Managers whose job is to identify and analyze the best investment opportunities and monitor the investments made, so as to maximise the returns for you.
Are you putting all your Eggs in one basket?
It’s definitely not a good idea to put all your money in one place. However, investing across a mix of assets, industries or sectors, may not be always practical. MFs provide the chance to put your ‘eggs’ in different baskets, thus spreading your investments over a wider range and hence minimising the risks. Investing through SIPs helps you make the best of a fluctuating market by buying the funds at varying prices. Also, the power of Systemic Investment Plan & Mutual Fund Investments is in the unique process of Compounding, where even the interest earned earns interest.
Is the cost Nominal?
Yes! In spite of being an individual investor, you get the advantage of scale when investing through MFs. The large volumes enable MFs to offer bentweetefits of lower cost alternative of managing funds and investments.
Is it ok to invest Smaller amounts?
Most MFs allow investments in smaller denominations, making it possible to periodically invest small amounts as per convenience. There’s a vast field of opportunities; you just need to decide the what and the how much. And when you are investing in MFs through SIPs, you can invest as little as Rs 1000 every month to end up with a lump sum amount in future.
Is it Expedient and flexible?
Investing through MFs is quick, simple and convenient. Especially with digitalisation, MF investments are now easy, with minimum paperwork. SIPs offer the additional convenience of a one-time application; post that ECS does the rest and you don’t have to spend your time and energy on ensuring you are staying invested.
Stringent regulatory guidelines ensure that MFs are handled with complete transparency and the investor is kept updated. So take control of your financial plans as you begin earning and start immediately, even if you have to start small. SIPs or one-time purchases – seek out smart wealth creation options.
Investing through mutual funds make SENSE. Mutual Funds Sahi Hai!
This is a guest post by Ms. Molly Kapoor. She is Head- Marketing at Aditya Birla Sun Life AMC Limited. You can follow her on Twitter @MollyKapoor for financial advice.