Mutual Fund investments are one of the lucrative investments for long term higher returns. Systematic Investment Plan (SIP) in mutual funds are now very popular among retail investors in India. Every day we hear new records in SIPs as more and more people are joining the bandwagon. There are various plus points in SIP investment, you must be aware of all these advantages of investing in mutual funds through the SIP route.
Diversified way of Equity Investment – Mutual Fund SIPs are diversified ways of investing in equity markets.
- Low minimum contribution – SIP can be started by retail investors with monthly contribution of Rs. 500/- or more. So this suits anyone in our country irrespective of income range. If you are starting your job and young, then you can start low as your income may be low. If someone has started late and want to commit higher amount, they can do so. Some select funds also allow to start SIP from Rs. 100/- per month.
- Increase or reduce SIP amount – you have choice of increasing or decreasing the SIP amount in between anytime. If you want you can start SIP in additional funds also. There is no limit.
- Once set this will automatically be invested. So, you do not have to worry for anything. This brings discipline in investment. You can contribute as long as you want. You can extend tenure also. After completing the tenure, you can also stay invested with the amount that has already gone inside. You can stay invested for years, decades or until you need this funds/corpus.
- You can stop SIP before completion of full tenure also. You can bounce a few contributions also. You can revive the SIPs also. So many options and flexibility.
- You can also redeem before maturity if you need money for any exigency.
- As you by on fix date, you average out your purchase price. So, works best for people who wants to contribute for longer period.
- Cost of fund management in Mutual Funds are also reasonably low. So, SIP investment in mutual funds for long term purposes like retirement corpus or education corpus building will be more effective.
- Choice of monthly contribution or quarterly contribution or half yearly or yearly contribution. In case along with SIP, you want to put in additional lump sum that is also possible.
- SIP investors need not worry on market volatility. Market corrections are seen as opportunity to reduce buying cost.
Mutual Funds are regulated by SEBI & also have AMFI overlooking investors interest. So customers grievances will be addressed without any say.