Mutual Fund SIP: There is an option to invest a fixed amount every month through SIP. The best advantage of SIP is in long term investment.
Mutual Fund SIP : If you are afraid of investing in the stock market, then you can take advantage of the attractive returns of capital market through mutual funds. Due to diversification, investing in mutual funds is safer than direct equity. In today’s time investing in mutual funds is quite easy. You do not need a huge lump sum amount for this. Rather, you can invest in mutual fund schemes every month through SIP i.e. Systematic Investment Plan. It is similar to RD of a bank, but returns are based on the performance of the market. Experts believe that SIP is a better option for regular investment of small savings. The advantage of SIP is in long-term investments, where the benefit of compounding is available. This is because SIP works on Rupee Cost Averaging.
What is Systematic Investment Plan (SIP)
SIP i.e. Systematic Investment Plan is a method of regular investment in mutual fund schemes. In this, weekly, monthly, quarterly, yearly investment options are available. You can invest with a minimum of 500. The minimum investment in many funds is also Rs 100. Wealth creation can be done easily in the long term through SIP. The sooner a SIP is started, the more it benefits in compounding. Considering the volatility of the market, investing through SIP is a better option. The risk in investing with SIP is low. Along with this, there is also an option to increase the amount of SIP in future.
Advantages of Rupee Cost Averaging
Amit Kumar Nigam, Director, BPN Fincap says that an investor makes a lot of speculations about when to enter the market. That is, whether there is an environment worth investing money in the market right now or not. But, it is difficult even for an experienced professional to know when to enter or exit the market. We often rely on emotions and get influenced by market conditions. There is an advantage in investing through SIP that it works on Rupee Cost Averaging. That is, Rupee Cost Averaging reduces the chances of guessing.
Let us tell you that in Rupee averaging approach, if we invest a fixed amount at regular intervals, even if there is a rise or fall in the market. This ensures that we buy more units when the market is down and less when it is up. This approach reduces our average cost per unit in the long run. SIP works on this principle. This simply means that if the investment is maintained for a long period, then the fall will not have much effect.
21.13 lakh new SIP accounts registered in August 2022
According to the data of Association of Mutual Funds in India (AMFI), the number of SIP accounts reached the top of 5.71 crore in August with an investment of Rs 12,693.45 crore. The SIP AUM (Asset Under Management) is at an all-time high and has reached the level of Rs 6.39 lakh crore. In August 2022, 21.13 lakh new SIP accounts were registered. On the other hand, SIP AUM is at an all-time high due to the increasing interest of retail investors. The total folios and AUM of SIP folios and mutual funds are also at an all-time high. Retail investors account for more than 50 per cent of the total assets under management of the mutual fund industry.