Accelerate your financial growth with SIP

We all have a common desire, that is, to ‘become financially strong’. But just thinking about it will not accomplish it; we will have to work hard to achieve the same. So, before moving towards it, we need to know what can help us get there, to make the path easier. Everyone is aware that only money has the power to create money. Therefore, the savings that we owe are the sources of reaching the financial objectives and SIP is the route for the same.

What is SIP?

The SIP, which stands for Systematic Investment Plan, is a way of investing in mutual fund schemes. By virtue of this, it is required to put the amount of money at regular intervals which is automatically debited from bank accounts and placed in various investment schemes. It has a package of benefits and provides the following advantages to an investor:

1. Small amount payment: One can start putting their money into diversified projects with just Rs 500 or Rs 1000, through SIP, which does not create a charge.
2. Periodic remittance: According to the nature of the SIP and its operation, it requires the amount to be paid on a recurring basis, for example, monthly, and therefore helps the investor to plan his monthly spending accordingly.
3. Debit Money Automatically: Once the investor registers with the AMC to invest in the SIP, he associates his bank account with it and the amount of money for the investment is debited from there without problems.
4. The power of compounding: In investment, we receive interest on a specified rate. It can be a simple or compound interest rate. In SIP, investments earn returns on a compounded basis. According to which, the interest earned on the principal amount also generates returns, that is, ‘interest on interest’. For example, you invest Rs 20,000 at 10% simple interest for 5 years. On the due date, you will receive an amount equal to Rs 30,000 whereas, in the case of compound interest, the value of the investment on the due date will be Rs 32,210.20. Consequently, it is more beneficial for the investor.
5. Average cost in rupees: Each scheme under the SIP has a net asset value (NAV), which is basically the unit price of that scheme, on the basis of which the units are allocated to the investor. Lower NAV means more units and vice versa. Because it keeps changing regularly, each time the investor’s money is put into the plan, they get a different number of units. Therefore, the average investment cost is reduced. Therefore, the investment in SIP is low cost compared to others.

In addition to the main benefits above, SIP also provides the following:

• flexibility

• convenience

• tax savings

• Diversification

• Wide choice

Consequently, if one wants to achieve financial growth and experience riches, SIP (Systematic Investment Plan) is one of the best choices to make. It is capable of meeting the requirements of all investors and is a win-win.

In the study of economics we come to know the power of saving and its relation to investments. For the growth of a country’s economy, investment plays a crucial role that leads to the comprehensive development of its citizens. Therefore, we can conclude here that by investing our savings in SIP mutual fund schemes, we can achieve our goal of experiencing financial freedom.