Mutual Fund Investment is the most preferred way to create wealth in India. You can invest big or small through the option of Systematic Investment Plan (SIP) to build a healthy corpus.
In the last few years, Mutual Fund industry is witnessing a phenomenal growth of SIP-based investments. It can attribute to the sheer simplicity of investment avenue. SIP provides a systematic way of investment on a regular interval in mutual funds. The most systematic way is to invest on monthly basis. Other options like daily, weekly and quarterly are also available.
The great thing about SIP is its minimum investment amount. You can start investment as low as Rs 500 per month. Thus instead of making a large investment in one go (like Lump sum investment), you can opt for SIP.
For example, If you have 10,000 rupees and want to invest in Mutual Fund. Many investors choose the lump sum way to invest Rs 10,000 in one go. But you can opt for SIP route and pay Rs 500 or 1000 in 10 or 20 periodic monthly installments. Thanks to SIP, mutual funds are now within the reach of common man. It enables even those with tight budgets to invest a minimum amount on a regular basis in place of making a large investment.
Yet one of the biggest myth in the industry is that SIP is meant for small investments & they work for small investors only. On the contrary, SIP is also used by many HNIs as an option to invest in the markets. The reason for this is pretty simple. More often than not, equities exhibit great volatility and are prone to fluctuations due to several unknown and known factors. To beat the blues, smart investors opt to invest through SIP. And then let it take care of their investments on an auto-pilot mode with the benefit of Rupee Cost Averaging.
Rupee Cost Averaging is an approach in which you invest a fixed amount of money at regular intervals. This, in turn, ensures that you buy more units of an investment when prices are low and less when they are high. And the principle of compounding (Compounding means that the returns on investments themselves become part of the investments and start generating returns) returns at work. SIP is a great way to create a corpus over the long term.
