Virendra Singh Ranawat
Breaking the age old tradition of savings through depositing the money in the bank accounts, is the new scheme- Systematic Investment Plan (SIP). Germinated from a small sapling, SIP has now bloomed to a gigantic tree branching with each passing day. Still people are hesitant to manoeuvre it. The reason being various misconceptions attached to it and lack of relevant cognition. Under the improper guidance, people tend to believe that SIP is nothing but another way of forgery. The same is not true.
Continuity upholds a very notable locus in every sphere of life. From studies till job we follow a continuous process. It may be slow, but it is no doubt steady. Thus, we abide by the saying, “Slow and steady wins the race” in each aspect of our lives. But, when it comes to investment, we turn a deaf ear towards our intellectual and simply pick up any investment scheme without giving it much thought. This should not be the case. While, buying groceries we try to hand-pick each and every item. Then what happens to us when we are planning our investing?
Before formulating any notion, one should forage all the options available. A baby cannot grow in one single day. Constant care and proper nutrients facilitate the overall growth of the child. Likewise, the money needs to be invested in right places and requires consistent tracking in order to multiply. Only earning is not enough you need to double what you earn. Systematic Investment Plan provides you room to invest and bloom gradually but steadily.
Systematic Investment Plan is nothing but penny by penny investment that you make on a regular basis to enjoy a rich corpus.
Countless research shows the benefits of SIP over its other variants. SIP is a boon to the younger investors who are debuting their careers. The habit of investing on a monthly or quarterly basis would prove a blessing in disguise. Initializing with a relatively small amount, the beginners can gradually move to higher levels of monthly SIP. Inseminating the habit of regular investment in the trendsetters is a sign of economic welfare in an economy.
The epicenter of a systematic investment hovers around step-by-step investment to create an enormous amount. Thus, Systematic Investment Plan operates on two main traits viz, rupee cost averaging and power of compounding.
SIP is no magic, neither it is an investment itself. It is just an interface between the client and the mutual fund scheme. So, we can say SIP acts as a postman and simply carries the money from the client to the scheme. But, as a method Systematic Investment Plan facilitates the clients to add to their reserves for future funds rupee-by-rupee. Also, you need to understand that the concept of time stretch plays a very tricky role here. The early you start investing the more time span your money gets to multiply. Therefore, even with a small amount as per month SIP, you can accumulate a relatively greater corpus over a prolonged time period. In contrast, to it, you will gather a relatively less corpus if you start investing late even with high monthly SIP. Thus, the time constraint is a very crucial aspect of determining the growth of SIP.
Some insights of Systematic Investment Plan
To understand SIP thoroughly one needs to fathom the understated bullets:
- Analyze your requirements minutely:
What is the aim of investment? At what time you need your investment to mature? How much corpus is targeted? These are all fundamental questions you need to pinpoint before the investing decision is made. The client should be coherent in judging the requirements as it is the first and foremost stride. Think and re-think about the speck influencing the investment decision.
- Run a deep scan of the market:
After settling down on the requirements, the next step is to find out a suitable scheme. As proper diagnosis by the doctor is detritus unless an appropriate medication is provided for it. Likewise, until a satisfactory plan is selected, there is no point in requirement analysis. Also, you should not select just any scheme for the sake of choosing. There should be a balance between what is required and what the scheme is providing.
- Uniformity is the kernel:
Requirement analysis and selection is no doubt the epicenter of investing. But, consistency in investment must be followed without fail. Selecting the best of the schemes will not provide any benefit to you unless you keep going with your investment for a prolonged duration. Even with a good opportunity in hand will not help you till you work on it with dedication. In above mentioned example, where the doctor had analyzed your symptoms, advised the whole course of medication, but gaining health benefits is entirely in your hands. Consuming the medication as advised by the doctor is the only way out of your illness.
- Patience is a virtue:
No tree germinates in one single day. Hence, money also cannot multiply itself in one night. Constant efforts are required for wealth accumulation. So enjoy your success one-by-one. Do not expect some magic to happen and don’t imagine yourself sitting on a stack of money. SIP is a present investment made in order to reap its benefits in the future.
- Keep your eyes open:
Monitoring your investment is imperative. Never turn a blind-eye towards your investment. Even after selecting the schemes through a rigorous process, there is an ongoing demand of tracking the performance of the scheme. This doesn’t imply keeping an eye on the slightest momentum of the scheme. But, once or twice in a month the client should review the performance. After all the efforts plus the money should pay you back handsomely, lest all the efforts go into the drain.
SIP is unquestionably the best investing method which will not only instill the quirk of continued investment in the client but will also aid them to make the optimal use of their investments. Still, it is at the client’s discretion whether to take it or not. The difference is in the strategy and not in the aim. Security is the paramount distress of the investors. Systematic Investment Plan is providing an amalgamation of two namely, security and growth. Decide for yourself.
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