This plan refers to automated investment in mutual funds monthly. One of the best things about this plan is that the amount gets deducted from the account automatically and then invested in the mutual funds. Not only does it make the investment process simpler, but it also helps in the wealth creation of the person.
What makes SIP favorable?
What works in the favor of SIP is the power of compounding. Not only is it one of the top benefits of SIP, but it also helps in building a strong corpus over a long time through the compounding power of money. SIPs help an individual to reinvest the earnings made from previous investments and get further interest from them. This way the SIPs help in the long-term wealth creation of an investor over time on a limited sum.
Features that help in wealth creation
Here are certain benefits and features of SIPs that help in generating wealth over a fixed period.
- A small amount of investment: People with a very limited amount at their disposal can start investing in mutual funds through SIPs. Following a simple process of small regular investments, the scheme is a great investment opportunity for all people. The monthly investments start from as low as Rs 500 monthly.
- Easy and simple investment: By regularizing your investment, SIP helps in long term wealth creation. Just by investing a small monthly amount through ECS in SIP mutual fund, you can make the most of your money and not miss the opportunities presented by the market.
- Free from market time: Since the investments are made at regular intervals, it helps in developing a controlled and systematic investment and overall financial management. This allows a person to have freedom from the bounds of market timing.
- Averaging Rupee cost: No person can ever predict the rise and fall of the stock market. However, people investing in SIPs benefit even during the market falls. More units get added to the investor’s account, thus benefitting in the long term. The investors can then sell these units at the time of market booms and make sizable profits.
- Better returns: SIP investments are not guided by any market situation. This makes the investor better equipped to benefit the most from the opportunities arising from different market situations. The money compounding SIP feature helps in generating the risk-adjusted returns over a long period.
Conclusion
As discussed above, SIPs health in long-term wealth gain. This is mainly done through the power of compounding. You can invest in them even if you are a safe investor. In addition, it will also save you from the market hassles and get you better returns from your funds. If you are looking for ideas regarding which are the best performing SIPs in the market and which ones help you in getting better returns, contact our experts today.
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