How To Invest In SIP Plans For Long Term
Investing in mutual funds through Systematic Investment Plan (SIP) is simple and convenient. You can invest a fixed sum of money either quarterly or monthly. As you invest a small amount of money regularly you can reach your goals over a period of time.
Investing the right SIP amount in a disciplined way over a long period of time is good for financial health. As you invest regularly you do not have to worry about timing the market. If you invest for long term then the investments are not affected by market volatility. Investing a fixed amount regularly allows you to buy more units whren the market is low and less units when the market is high. This brings down the average cost of acquisition of units.
When you invest for long term you should select the sip plans that help you reach your goals and you should invest the right amount regularly in the sip plans. There are many funds and it is difficult to select the right fund. You can consult a financial advisor to find the best sip plans for long term. Select the plans that suit your requirements and help you reach your goals.
Investing small amount of money regularly for long term can have a significant effect on wealth creation. The longer the duration of investment the more the benefits of compounding.
Tools
There are many tools and calculators available which can be used to calculate how much returns a particular SIP can generate. The input to the calculator is your investment per month, the duration and the expected rate of return. The output of the calculator is the total amount you get at the end of the investment period.
There are other tools available which help you find the amount you get at the end of investment period. The inputs to the tool are the scheme invested in, the amount, frequency of investment, for date and to date. The output is the value on a date and a graph.
Why to invest through SIP?
There are many benefits of investing through SIP
It is a convenient as it is an automated process.
It brings discipline to investments as you invest regularly.
It has the power of compounding. You can start early to save more.
You can buy more units when the market is low and less when it is high. This is called Rupee Cost Averaging.
