There was a time when Indians used to save their money in conventional FDs, gold and post office schemes, but with the rise of inflation and change in the policies made by the government, the people are forced to shift their savings from physical assets to financial assets. The spurt in the number of SIP’s, demat accounts, domestic retail inflows mark a clear shift in the savings pattern. The best systematic investment plan offers the power of savings and liquidity. The numbers speak for itself!
Currently, Indian mutual funds industry has around 16.6 crore of SIP accounts through which the investors contribute the amount in mutual fund schemes regularly. The inflows have been earmarked to Rs. 5,000 crore per month, which indicates the shift in the mindset of Indian household.
Why SIP has become a favoured investment route?
The interest rate on most of the retail savings plans have been reduced to 4 percent while fixed deposit interest rates have declined by 200-300 points, thus, making it lose their appeal. A systematic investment plan allows the investor to park their money in mutual fund schemes, especially in equity schemes.
Here are the reasons why you should start wealth creation early in your life through the best systematic investment plan.
1 - Financial discipline
One of the primary reasons why you should invest money in the best systematic plan is they impart a regular saving habit within you. It helps you to invest money without thinking twice about the market sentiments, index level, etc.
2 - It helps you to maximize the returns
SIP helps you to maximize your returns. When you invest regularly irrespective of how the market is, you would fetch more units when the market is facing bearish conditions and less units when the market is in a bull mode. This averages out the cost of your mutual fund units.
3 - Power of Compounding
Another benefit, often referred as the 8th wonder of the world. When you invest for a long time and reap returns on it and then invest it again, your money will automatically start doubling. This will help you to build a large corpus and achieve your financial goals with small saving instruments.
4 - Customise the manner you want
You can customize the SIP depending upon the reason why you want to invest- to save taxes, to build home, for child education. You can start with a fixed amount every month or go for bi-monthly and fortnightly depending upon your convenience. Apart from that there is a new feature in SIP called as Step up SIPs that helps the investors to increase the amount periodically. Alert SIP is a regular systematic investment plan that sends a notification to the investors to buy more when the markets are in a bearish mode.
Another SIP that is worth mentioning here is perpetual SIP, in which the investors can choose the closing date of SIP. Once the financial goal is complete, the investors can stop the SIP by notifying the fund house.
Hope this quick guide on SIP can help you to create wealth strategically. Carefully select the best systematic investment plan to achieve your long term financial goals.