SIP: Investing Systematically: The coronavirus pandemic is creating uncertainty and volatility in the market. Thus, Systematic Investment Plans (SIP) are emerging as one of the preferred investment options amid this ongoing crisis.
But why SIP?
SIPs provide a range of options from saving to investing for investor’s various financial goals. Along with freedom and convenience SIPs also helps in maintaining financial discipline. This means it helps an investor to stay on track to achieve their financial goals.
Also, when an investor invests using SIP then he/she doesn’t have to worry about drastic and unexpected changes in the financial market, especially equity markets. When an investor tries to invest on its own on a regular basis then there is a high chance that the market movements can weigh in heavily on the decision-making ability of the investor.
Another important reason why an investor should choose SIPs is that it helps in maintaining financial discipline. Financial discipline in terms of persistency i.e. in investing regularly. For achieving a long-term financial goal then a regular investment over a period of time is the most essential thing and SIP helps investors in doing so.
SIP Investing Systematically also comes with a compounding power which means that the return that an investor has already earned on an investment, in turn, acts as an investment itself, thereby increasing the final return.
One of the major benefits that SIPs provide is that it allows investors to plan for their financial goals accurately. Investors can break down their long-term and short-term goals and then they can invest accordingly to finally achieve their goal and at any stage of the investment, investors can evaluate how close or how far they are from their financial goal.
The habit of regular investments can help investors to accumulate a healthy corpus over the long term. As such, it is always good to start investing early. However, one must never forget that SIP is a journey to financial prosperity that moves through the road of financial discipline.