Systematic is the word that describes you. Organized, well-managed and planned in every part of life, whether it is earning, saving or spending, everything is done in a systematic manner. A SIP is planning of investment with horizon of long-term, which allows you invest regularly that too with even small amount of Rupees 500 per month. There are many advantage of SIP:
First, if you are a salary earner your income is limited to the extent of salary you receive from your employer. In the various stages of life you need money all of a sudden but it do not have a habit of making regular saving and have a spending habit at the time of need money you feel frustrated, “Oh! If I would have saved some money it would worked for me now.” To avoid such situation what you need is to invest in such instrument that will give you chance of excellent returns over a period of time as well amount will be readily available when it is needed. In this regards mutual fund is the best investing avenue. Investing systematically will help you in this regards. To postpone spending and unwanted shopping what you need to do is keep only reasonable amount in your debit card saving account, when there is no money you will not spend and one day you will find that you are having handsome amount in your mutual fund account.
To do this best way is to fill Electronic Clearing System (ECS) mandate form along with common application form of mutual fund scheme having excellent track record. The Electronic Clearing System (ECS) date you should select nearer to date of your salary credit date to your account. Saving is an arduous task for you, then SIP can do this for you. Money deducted from your account through auto debit, standing instructions, Electronic Clearing System (ECS) or post-dated cheques and invested is money you cannot spend. And a rupee saved is a rupee earned. Even if each investment is small, over time this can add up to a neat kitty. And the power of compounding can do wonders. In due course of time, a small amount can grow into a significant amount. More importantly, an SIP does away with the need or effort to time the market. When the market is falling you may feel that it may decline further and that you should wait a while. Often stock markets make a recovery before you notice and the opportunity is lost. When markets are rising it is scary to invest money. Isn’t it better that you wait for a correction and then make an investment? But if the correction doesn’t come about, then even this opportunity is missed. And if markets are going nowhere, then what is the point in investing at all?
So, trying to find out which is the best time to invest can be a tough task. And that’s why it is said that timing the market is futile. If one could take advantage of the ups and downs that markets encounter, it would be great. And this is where SIP fits in. By the process of regular investing one gets to invest in the highs as well as the lows, and this helps in averaging out the volatility in the market.
In long term mostly SIP gives excellent results. For example if one who had invested Rupees 5000/- per month since December 1995 in Reliance Growth Fund with Growth Option till June 2009 his total investment amounts to Rupees 815000 and value as of 15 June 09 was Rupees 96,59,926 approximately Rupees Ten Millions i.e., almost 12 times in 13.5 years. It is the magic of SIP.
Author: Sadanand Thakur
Article Source: EzineArticles.com
Provided by: Beading Necklace
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