KNOW SIP SYSTEMATIC INVESTMENT PLANNING
1)What is SIP?
Systematic Investment Plan (SIP) is a financial planning tool that helps you to create wealth, by investing small sums of money every month, over a period of time. A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors invest regularly in a disciplined manner.
2)How SIP works?
SIP is a method of investing a fixed sum, regularly, in a mutual fund scheme. SIP allows one to buy units on a given date each month, so that one can implement a saving plan for themselves. The biggest advantage of SIP is that one need not time the market. In timing the market, one can miss the larger rally and may stay out while markets were doing well or may enter at a wrong time when either valuation have peaked or markets are on the verge of declining. Rather than timing the market, investing every month will ensure that one is invested at the high and the low, and make the best out of an opportunity that could be tough to predict in advance.
An investor can invest a pre-determined fixed amount in a scheme every month or quarterly, depending on his convenience through post-dated cheques or through ECS (auto-debit) facility. Investors need to fill up an Application form and SIP mandate form on which they need to indicate their choice for the SIP date (on which the amount will be invested). Subsequent SIPs will be auto-debited through a standing instruction given or post-dated cheques. The forms and cheques can be submitted to the office of the Mutual Fund / Investor Service Centre or nearest service centre of the Registrar & Transfer Agent. The amount is invested at the closing Net Asset Value (NAV) of the date of realisation of the cheque.
Now let’s briefly discuss the step-by-step approach an investor can use with SIP to reach out for his goals. It is important to remember that an early investor builds more than the one who comes in later. the simple reasoning being the accumlated investment increase with fresh capital which is invested at periodic intervals.
1) Set your financial goals.
2) Identify the scheme.
3) Decide the SIP amount.
4) Look for long term commitment by opting for bigger gains. Sip returns increase with an extended time horizon. Aim for the big picture which is to get the most out of the market fluctuation.
5) Start investing. The sooner you start, the earlier you reach your financial goals.
Become A Disciplined Invester
Being disciplined – It’s the key to investing success..
Think of each SIP payment as laying a brick. One by one, you’ll see them transform into a building. You’ll see your investments accrue month after month. It’s as simple as giving at least 6 postdated monthly cheques to us for a fixed amount in a scheme of your choice. It’s the perfect solution for irregular investors.
Reach Your Financial Goal
Imagine you want to buy a car a year from now, but you don’t know where the down-payment will come from. By investing an amount of your choice every month, you can plan for and meet financial goals, like funds for a child’s education, a marriage in the family or a comfortable postretirement life. The table below illustrates how a little every month can go a long way.
Grow Your Investment With Compounded Benefits
It is far better to invest a small amount of money regularly, rather than save up to make one large investment. This is because while you are saving the lump sum, your savings may not earn much interest.
4)Key things to remember while investing in an insurance plan
• Set financial goals – both short term and long term
• Maintain balance between risk and returns; allocate amount accordingly
• Investments should be both liquid and fixed. This enables you to use them in emergencies as well as avoiding overspending
• Best is to start with small and gradually increase invested amount. Choose premium payment options ranging from monthly to annual to single premium
• Research a lot before investing; use help of financial planner if need and invest in the best investment plan
• Review portfolio each year and make changes accordingly
• Ask questions – Resolve all your doubts before investing. Use investment calculator to calculate exact premium before buying.
KNOW SIP (SYSTEMATIC INVESTMENT PLANNING)
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KNOW SIP (SYSTEMATIC INVESTMENT PLANNING)
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