SIP The powerful tool in the hands of middle-class people

In the last few years, investment avenues are opened in the financial market. The share market, real estate, gold and many other sectors are open for the investors where the mutual fund is proven as the best option. The market has end number of options available in the market, and among all the options, the mutual fund is the best one. There are ample benefits that mutual fund investors can get from different mutual fund companies. The investor can have options such as investing via offline or online.

There is also another option for the investment, which is known as Systematic investment plan. For a new investor, there are also some questions. The foremost important one is the safety of the investment options. The investors wonder and think about not only the liquidity but also other aspects of the investment and return as well as risk for the same.

What is SIP?

The systematic investment plan is known as SIP. In this option, one can invest in mutual fund in installments and does not need to put all money in one shot. There are many benefits of investing in a mutual fund.

  • Investment with fewer amounts: In SIP, one can invest with as low as 500 a month. Hence the saving and investment do not become a burden on him. One can go for one SIP or more than one SIP also.
  • Direct debit: ¬†For investment here, one does not need to go to the bank as the money to the company is directly transferred from the bank. The investor needs to keep the balance in the account of his bank, and the company will get the required fund every month on a fixed date. Hence payment to the mutual fund company is also not an issue.
  • Online/offline option: The investor can prefer to go for an online or offline option of investment. One can go for any of these options as per his choice. Those who are tech-savvy can go for the online option while others who do not know how to carry out the online process can go for the offline option also.

Is investing in SIP a good idea?

For almost every investment avenue, one needs to go for the risk and return analysis. This can help one get the best option as per his need. If one goes for SIP, he invests the amount in the market during a bull run as well as bearish trend. Hence sometimes for the same amount, he can get fewer units at a high price while sometimes he can have more units at a low price.

The power of compounding and averaging can help one can enormous return in a medium-term also. Hence compared to all the other options in the market, the investment in a mutual fund is not only safe and with the good return but also easy and with ample liquidity. One can also invest in ELSS with the help of a SIP.