Secure Your Future, One Month at a Time

Imagine the first week of the month when you are looking at allocating and shuffling your finances to pay all your bills, managing personal expenses, and of course, locking away some savings. You promised yourself to start investing last month, and somehow you find yourself struggling to put up a lump sum of an honorable amount to set the investment ball rolling. Surely, everyone has all been through the grind. The familiar guilt of faltering on the investments and making up with a large sum of money seems inevitable. But, let’s review this scenario a little later, and go on to what investment avenue is well-suited to most investors. Gaining popularity with its provision of a diverse portfolio and mitigated risks are mutual funds. They also come with a big plus - Systematic Investment Plan (SIP). An SIP entails monthly investments made using smaller, manageable amounts of money. It has allowed even amateur investors to dispose their money in a comfortable manner, without feeling the pinch of parting with a visibly larger sum of hard-earned money. Needless to say, it comes with a set of advantages that make the entire process of investment much easier and accessible. First of all, it inculcates a sense of discipline in the spending and saving habits of the investor. Where one could originally decide how much money one chooses to invest, with an SIP, one knows that an x amount has to be kept untouched to be invested. Secondly, the fluctuation in market prices will have a lesser influence on the investment. How? Simple — smaller amounts are exposed to the market instead of the corpus. Thirdly, with a strategy called ‘Rupee Cost Averaging’, one ends up buying more equity shares at lower costs than all at a higher cost. Fourthly, by the power of compounding, an early investor will benefit from higher returns in the long term, than someone who joined the bandwagon much later. Lastly, an SIP is convenient as the investor can choose to invest using direct debit from their account itself, without the need to physically hand over the money. This pretty much lends a direct answer to your plight mentioned earlier. The solution doesn’t lie in investing a handsome sum but in investing a small sum intelligently and habitually. Like they say, ‘Every drop makes an ocean.’ This stands testimony to the fact that smaller yet periodic investments could be a simple, smart and sorted way of wealth creation. Financial firms like banks, mutual fund companies offer many schemes / plans for investing your money. Some of the mutual funds schemes are risky as they are related with market. While investing in SIP you don’t need to depend on market price to decide whether it’s a good time to invest or not.