How does a SIP Help you Achieve your Financial Goals?

Did you know that you can create a considerable corpus by investing small amounts regularly? Mohan started putting aside Rs.5000 in a mutual fund SIP when he was 30 years old. After 15 years, when Mohan needed funds for treating his father’s cataract, his fund had grown to a whopping Rs.25 lakhs (approximately) at an assumed average return of 12%. He paid for the surgery easily by withdrawing only 10% of his investments and was happy with the decision to start a SIP.

Waiting to accumulate considerable funds to invest in a  mutual fund scheme costs you a return that you could have earned had you started earlier. Thus, you can choose mutual fund SIPs (Systematic Investment Plans) and start investing small amounts early on without waiting for the ‘right time’.

There are two ways of investing in a mutual fund- lumpsum or systematically through a SIP. A SIP is a systematic route of investing that helps you attain your financial goals faster and in a disciplined manner. To get a better idea, you can use a mutual fund calculator that can help provide you with essential information that helps you decide how much to invest periodically.

The money you invest in the SIP gets invested periodically and gradually over time, which reduces the overall risk of volatility in your portfolio with rupee cost averaging. Thus, SIPs are a great way to start investing small amounts of money regularly, which can help you build wealth over time.

A SIP is a route of investing in a mutual fund managed by an expert. It helps you to invest money periodically and gradually grow your corpus over time. Thus, a SIP is excellent for people who want to start investing but have a smaller quantum of money to invest at once but wishes to build a larger corpus over time.

You can get an estimate of your SIP investing needs to fulfill your financial goals with the help of an online SIP calculator.

How does a SIP help you achieve your financial goals?

This section aims to provide you with the information you need about a systematic investment plan (SIP) and how it can help you achieve your financial goals. You can select the mutual fund’s scheme for investment based on the SIP calculator, which allows you to analyze your financial objectives, risk appetite, and expected returns.

You need to choose a specific mutual fund wherein you can invest your money systematically through the SIP route, which could be either equity or debt, based on your asset allocation and risk tolerance. Typically, you should invest in an equity mutual fund for long-term wealth portfolio building. You need to opt for the amount of money you wish to invest systematically every week, month or quarter and then opt for the scheme in which you want to invest. Setting up a SIP mandate can be easily done online once your KYC is updated with the registrar.

All you need to do before starting your SIP is to determine your financial goals and monthly investment. This can be easily calculated through any of the online mutual fund calculators. You can also use the mutual fund calculator apps that can help you examine your financial goals and help you with investment strategy. These online mutual fund calculators will help you choose a portfolio which could be aggressive, balanced or conservative, based on your risk appetite.

Why are SIPs a beneficial way to invest?

When you invest through SIPs, you can regularly invest small and affordable amounts and build your financial portfolio. You need a minimum investment of Rs.500 only to start a SIP. This amount can be set aside even if your income is low, and you can start investing from an early age. SIP investments are beneficial because –

●       They are easy and within reach of small investors

●       They help you build a disciplined investment habit through regular investments

●       If you invest over a long-term period, the power of compounding works wonders and multiplies your returns exponentially. Take the above example of Mohan for reference. He invested only Rs.5000 every month or Rs.9 lakhs over 15 years, and after 15 years, his corpus stood at Rs.25 lakhs, a more than a 250% increase. Amazing, isn’t it?

●       SIP investments are made at a particular date automatically. You, therefore, do not have to time the market on every investment.

●       SIPs give you the benefit of rupee-cost averaging, which averages out the effective NAV of  the fund over different market cycles

●       SIPs help investors to create an investment portfolio systematically with disciplined investment. This investment portfolio would eventually help investors meet their long-term, mid-term as well as short-term financial goals.

Thus, SIPs are the best way to go about it if you want to invest in mutual funds. While SIP investments are a wise choice, how do you go about it? How about through a mobile application?

Technological advancements have changed the face of the modern world. The humble mobile phone, which was launched to send and receive calls while on the go, has now become Smart. Smartphones have taken over feature phones as they offer a bundle of gadgets combined in one. You can, therefore, use your Smartphone as a watch, alarm clock, camera, planner, or calculator, and connect with your loved ones. Various applications, such as the ETMoney App, have also been developed for smartphones, which has brought shopping, socializing and also investing to your fingertips, quite literally!

Linda Smith

Im a dedicated finance content writer with a passion for simplifying complex financial topics. With a knack for clear and engaging writing, I hav almost 9 years of experience in this field and i can transform intricate financial jargon into easy-to-understand content. I strive to empower readers with valuable insights and knowledge to make informed financial decisions.

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