Ever since the markets turned volatile, SIPs (systematic investment plans) have emerged as a buzzword. Advisors, financial planners and fund managers are all exhorting investors to opt for SIPs. However, in all the SIP frenzy, investors seem to have been misled into believing that the SIP is an investment avenue.
SIP is simply a mode of investing in mutual funds, which permits investors to make staggered investments rather than a lump sum one. As a result, in volatile times, investors benefit by receiving a higher number of units and thereby lowering their average purchase cost.
In the world of investments, there is no such thing as a ‘best investment’; in other words, one size doesn’t fit all. An investment that is right for one investor can be grossly unsuitable for another. Hence the key lies in selecting an investment that’s right for the investor in question. And since there is no best investment, there is no best SIP either.
Investors need to first identify mutual funds that are right for them, and then consider investing in them via the SIP route.
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I strongly feel SIP (Systematic Investment Plan) is beneficial for the following basic reasons:
>The risk of interest rate is low.
>You can have a
-clear idea on ups and downs of the Market
-check on the No. of units.
>Exit load is low when compared.
>The investment is in a disciplined manner.