Are the daily ups and downs in the market giving you sleepless nights…one moment you think you should jump in and start buying the next you have thoughts of selling. A volatile or consolidating market creates just these sentiments among investors.
Wouldn’t it be great if you can actually buy more into the market when the prices are low (market is down) and buy lesser when the prices rise (markets are up). The simple step to do this is get into an investing method called Systematic Investment Plans (SIPs) in Mutual Funds.
Systematic Investment Plan
A Systematic Investment Plan (SIP) is a method of investing a fixed sum, on a regular basis, in a mutual fund scheme. It is similar to a regular saving schemes like a recurring deposit.
Buy low, sell high. Just four words sum up a winning strategy in the stock market. But timing the market is not easy, even for experts. Therefore, rather than timing the market, investing regularly month after month will ensure that one is invested at the high and the low, and make the best out of an opportunity that could be tough to predict in advance. Therefore, for a small investor, there is a huge risk in making large investments at one time. An SIP actually reduces this risk, by spreading the investments over a longer period of time, at various levels of the market.
Some points to consider before deciding on a SIP
- Ascertain your investment horizon.
- Decide on the periodicity of investment.
- Determine the amount you can comfortably invest in a SIP periodically.
- Pick a scheme according to your risk profile.
- Invest for long term.
“Just Rs. 1500 per month invested for 17 years @10% would grow to Rs. 8 lacs.could be used for your daughter's marriage.”
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