v Over a long term horizon, equity investments have given
returns which far exceed those from the debt based instruments. They are
probably the only investment option, which can build large wealth.
v In short term, equities exhibit very sharp volatilities,
which many of us find difficult to stomach.
v Equities carry lot of risk even to the extent of loosing
ones entire corpus.
v Investment in equities requires one to be in constant touch
with the market.
v Equity investment requires a lot of research.
v Buying good scrips require one to invest fairly large
amounts.
This calculator helps you calculate the wealth gain and expected
returns for your monthly SIP investment.
Benefits of SIP as compare to Lump sum investment
1.
It's an
expert's field - Let's leave it to them
Management of the fund by the professionals or experts is
one of the key advantages of investing through a mutual fund. They regularly
carry out extensive research - on the company, the industry and the
economy - thus ensuring informed investment. Secondly, they regularly track the
market. Thus for many of us who do not have the desired expertise and are too
busy with our vocation to devote sufficient time and effort to investing in
equity, mutual funds offer an attractive alternative.
2.
Putting eggs in different baskets
Another advantage of investing through mutual funds is
that even with small amounts we are able to enjoy the benefits of
diversification. Huge amounts would be required for an individual to achieve
the desired diversification, which would not be possible for many of us.
Diversification reduces the overall impact on the returns from a portfolio, on
account of a loss in a particular company/sector.
3.
It's all transparent & well regulated
The Mutual Fund industry is well regulated both by SEBI
and AMFI. They have, over the years, introduced regulations, which ensure
smooth and transparent functioning of the mutual funds industry. This makes it
safer and convenient for investors to invest through the mutual funds.
4.
Market timing becomes irrelevant
One of the biggest difficulties in equity investing is
WHEN to invest, apart from the other big question WHERE to invest. While,
investing in a mutual fund solves the issue of 'where' to invest, SIP helps us
to overcome the problem of 'when'. SIP is a disciplined investing irrespective
of the state of the market. It thus makes the market timing totally irrelevant.
And today when the markets are high, it may not be prudent to commit large sums
at one go. With the next 2-3 years looking good from Indian Economy point of
view, one can expect handsome returns thru' regular investing.
5.
Does not strain our day-to-day finances
Mutual Funds allow us to invest very small amounts (Rs 500
- Rs 1000) in SIP, as against larger one-time investment required, if we were
to buy directly from the market. This makes investing easier as it does not
strain our monthly finances. It, therefore, becomes an ideal investment option
for a small-time investor, who would otherwise not be able to enjoy the
benefits of investing in the equity market.
6.
Reduces the average cost
In SIP we are investing a fixed amount regularly.
Therefore, we end up buying more number of units when the markets are down
and NAV is low and less number of units when the markets are up and the NAV is
high. This is called rupee-cost averaging. Generally, we would stay away
from buying when the markets are down. We generally tend to invest when
the markets are rising. SIP works as a good discipline as it forces us to buy
even when the markets are low, which actually is the best time to buy.
7.
Helps
to fulfill our dreams
The investments we make are ultimately for some objectives
such as to buy a house, children's education, marriage etc. And many of them
require a huge one-time investment. As it would usually not be possible raise
such large amounts at short notice, we need to build the corpus over a longer
period of time, through small but regular investments. This is what SIP is all
about. Small investments, over a period of time, result in large wealth and
help fulfill our dreams & aspirations.
Need help getting started? FINVESTEDGE implement this
plan easily by saving for both the long term and the short term. Get started
here.
Mail us at:
finvestedge.in@gmail.com
Happy Investing!
FINVESTEDGE
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