Mutual Funds – SIP It Down & Feel Good

By | July 27, 2017

Mutual Funds - SIP It Down & Feel Good

What do you do to build a corpus? Traditionally, saving money out of your monthly income has been the most preferred way to build a corpus in a phased manner. As we grow older and responsibilities become heavier, mere savings will not help us with making ends meet. With the ever rising cost of goods coupled with inflation heading north, it’s paramount for us to look beyond and explore various investment options to put our hard earned money on the conveyor belt and churn our returns.

Our financial goals should be guided by the following principles for both mid-term and long-term monetary gains.

  • Creating Wealth
  • Sustained Growth
  • Optimised Risk
  • Affordability

If there is one product in the market that holistically fulfills the objectives listed above, it has to be Mutual Funds – SIP (Systematic Investment Plan).

Mutual Funds, as many of us know, is an exciting and balanced way to invest indirectly into debt and equity instruments. It’s a clump of products wherein expert fund managers create and manage the fund for a Mutual Fund company with investments from public and private players.

It is one of the most preferred routes taken by millions who want to invest in market-linked products. It helps investors shield themselves from taking a direct hit in cases of non-performance or losses since the risks are distributed on the basis of the units held by each investor.

There are many ways to invest in Mutual Funds. One of the most sought after has to be a SIP or a Systematic Investment Plan, where you invest a fixed amount into the fund monthly as per your financial convenience, over a predefined term. There are hundreds of Mutual Funds in India today to choose from. Some are purely inclined towards debt or equity while some offer benefits of reinvesting in a healthy mix of both.

Additional Reading: Why Debt Mutual Funds Are Better Than Fixed Deposits

Advantages of Mutual Funds – SIP

Affordable: You can invest as little as Rs. 500 every month over a predefined term, making it a highly affordable way to stay invested, creating wealth over the mid/long term. Depending on the fund in question, you can decide how much you want to invest on a monthly basis.

Easy to Sign Up: Its quite easy to open an account by completing the KYC (Know your customer) process by providing documents such as ID and address proof. Some companies even let you conveniently sign up online without elaborate paperwork.

Potential for Better Returns:  Since the fund manager has expertise in picking investments, you can you can expect potentially better returns. Some funds like ELSS remain locked for a specific period of time and it provides sufficient leverage for fund managers to invest in instruments of high potential and worth.

Easy to Manage: Mutual Funds are easy to manage. The installment is automatically debited from your bank account as of a specific date every month when you select modes such as ECS, OTM, etc. to make your investment. This makes it a convenient, hands-free operation. Plus, you can use online and mobile resources to monitor and manage your fund account. Everything is at your fingertips.

Tax Benefits: If you choose an ELSS Fund, you can claim exemption under the section 80C of the Income Tax Act, making it an attractive instrument for tax savings.

Serves Mid-Long Term Investment Goals: SIPs ensure financial discipline by keeping your hard-earned money away from you, while it is processed to yield attractive returns over a specified period of time. If you stay invested, that is.

Well, that is not nearly the end of the benefits Mutual Fund – SIPs have to offer. If you’re a beginner and excited about investing in SIPs, a little bit of homework is the need of the hour. Reading and understanding the nitty gritty of various funds can help get you started. You can also get the help of a financial advisor if need be.

Additional Reading: What To Remember When Investing In Mutual Funds

Choosing a fund that is a healthy balance of debt and equity would be a wise thing to do. It maximises returns while ensuring your money remains secured. The time is ripe to step into the world of Mutual Funds. If you’re a seasoned investor, trying different types of funds can do wonders in increasing your wealth.

An investor education initiative by SBI Mutual Funds

This material is for general information only and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Please consult your financial advisor before taking any decision of investment.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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