4 reasons for Investing Systematically in less than 2 Minutes

Can we study an important investment lesson in less than 2 Minutes? YES rn1. Light on the wallet: It is easier to put together a long term innings with singles than hitting 4s and 6s every time. It is suitable to save Rs.500 or Rs.1000 every month than trying to save a lac in one shot. SIP does not harm and it gives that long term advantage as well.rn2. Makes market timing inappropriate: If market lows give you the jitters and create you wish you had never invested in equity markets and then SIPs can help you blunted that depression. Most retail investors are not experts on stocks and are still more out-of-sorts with stock market oscillations. But that does not essentially make stocks a loss-making investment proposal. Studies have constantly highlighted the ability of stocks to do better than other asset classes (debt, gold, property) over the long-term (at least 5 years) as also to efficiently counter inflation. So if stocks are such a huge thing, why are so many investors difficult? It’s because they either got the stock wrong or the timing wrong. Both these problems can be solved through an SIP in a mutual fund with stable track evidence.rn3. Helps you construct for the future: Most of us have requirements that engage major amounts of money, like a child’s education, daughter’s marriage, buying a house or a car. If you had to save for these milestones during the night or still a couple of years in advance, you are uncertain to meet your objective (wedding, education, house, etc.). But if you start saving a small amount every month/quarter through SIPs that are treated as sacred and that is set aside for some purpose, you have a far improved chance of making that down payment on your house or getting your daughter married without drawing on your PF (provident fund).rn4. Lowers the average cost: SIPs work better as divergent to one-time investing. This is because of rupee-cost averaging. Under rupee-cost averaging an investor typically buys more of a mutual fund unit when prices are low. On the other hand, he will purchase fewer mutual fund units when prices are far above the ground. This is a good discipline since it forces the investor to entrust cash at market lows, when other investors around him are cautious and exiting the market. Investors may even be satisfied when prices drop because the fixed rupee investment would now obtain more units.