What comes to mind when you think of the festival of lights -- Diwali? Is it shopping for new clothes, sweets, firecrackers, or gifts for your loved ones? We all want to do something different to celebrate Diwali every year and start something new that we have had in mind for so long.
Since the festival is considered auspicious for new beginnings, what about the idea of starting a *SIP this Diwali and working on your financial health?
SIP Stands for Systematic Investment Plan wherein you can regularly invest a fixed amount at periodical intervals and aim for better benefits over a period of time through power of compounding.
Invest via SIP as a part of the Diwali to-do list and you canreap the benefits of financial well-being in the long run.
Let’s find out more about the potential perks of starting aSIP
The Basics of Investing in Mutual Funds Via SIP Route
The plan is simple. All you need to do is set aside a certain amount that you would otherwise spend during Diwali, keeping in mind that you will continue to invest the same amount through SIP without fail. You can set this amount after assessing your regular income and current financial liabilities if any.
Now that you know how much you can invest in SIP, it’s time to dig deeper into different types of mutual funds. There are three types of mutual fund schemes - fixed-income, equity, and hybrid funds -- each of which is further classified into subtypes.
It would be best if you analysed each of these fund types to find out which one best suits your needs.
Now that you have the amount you want to invest via SIP and the suitable type of mutual fund scheme, it’s time to select the one and start building your investment portfolio.
Benefits of SIP for a Secure Financial Future
You will get better at disciplined investing
Diwali is one occasion when people willingly prefer to spend money on things that bring joy and happiness. For many people like you, this festival may be an occasion to go on a shopping spree. Starting a SIP around Diwali with the determination to continue it no matter what will help you hold your horses in such situations. Concerning your income and other liabilities, you first want to set aside the SIP amount and then spend the rest wisely.
You can invest as low as Rs. 500 per month
One of the common myths about mutual fund investments is that only wealthy people can invest in different mutual fund schemes. The truth is that you can plan to invest via SIP irrespective of your monthly income. Generally, you can start the investment cycle from as low as Rs. 500 per month#. The minimum capping on SIP investments depends on your selected scheme.
(# Subject to Scheme Information Document (SID) of the respective scheme)
Your investments will grow with the power of compounding
When you start to invest via SIP early and continue with regular investments, your investment schedule can benefit from the power of compounding. In general, the longer the investment period, the higher the corpus you can accumulate over time to plan for achieving financial freedom in life.
For example, if you start investing Rs. 3,605 per month for the next 30 years, expecting a 5% annual rate of returns, you can achieve a goal of Rs. 30,00,000 by that time.
You will get to plan for various financial goals
Having a home you can call ‘your own’, buying your dream car, or travelling the world during retirement, you might have several goals in mind. But to fulfil them all, you will need significant funds. While you may not have enough money right now, you can plan to achieve all these goals over time with regular SIP investments.
You invest according to your risk profile
The right way to invest in mutual funds via SIP route is to first understand your risk tolerance. The degree of risk you can take will help determine the types of mutual funds you should invest in. Over the long run, this will help you become good at risk analysis.
Think of regular investments in SIP as the seed, the fruit of which may fulfil your desires for many Diwalis to come ahead.
Disclaimer:
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their affiliates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
