SIPs (systematic investment plans) have emerged as a reliable and disciplined approach to wealth creation over the years. SIP investment enables everyone to invest by making small, regular contributions. SIPs offer flexibility, allowing investors to start small and grow their investments as their financial circumstances improve. Here, well explore investment in SIP and how you can add to your celebrations through SIP investment in Diwali festival.
Strategies to build wealth
Why are SIP investments considered ideal
SIPs are considered ideal as they provide a relatively stable ground compared to equity trading. Further, they provide an opportunity to earn large sums of money simply through interest when invested over the long term. All SIPs thrive on two concepts, i.e., rupee cost averaging and compounding. The following is a brief explanation for both:
Rupee cost averaging: When buying a mutual fund at a high price, you get fewer units for that certain price. When the price reduces, you get more units for the same price in subsequent cycles. This averages out the ultimate mutual fund value.
Compounding: The money invested earns you returns over time. The interest thus earned is reinvested. Therefore, your interest also generates interest. The final amount that is received on maturity is determined by two things: the return accrued at the end of investment tenure and the period of investment.
Suggestions for choosing a suitable SIP investment
Selecting the appropriate SIP investment is essential to reaching your financial objectives. The following suggestions will help you with your investment:
Establish financial objectives: Decide your goals with your investments, such as accumulating a retirement corpus, purchasing a house, or paying for your childs education.
Determine risk tolerance: Identify your comfort zone in the market. This will help you determine your risk tolerance. Choose debt or hybrid funds if youre risk-averse; otherwise, you can opt for equity funds. You can consider investing in Bajaj Finserv Flexi Cap Fund if you wish to opt for an equity fund. On the other hand, Bajaj Finserv Liquid Fund can be a considered if you prefer debt fund.
Examine investment horizons: Keep your investment timeline at the core when making investment decisions. Your investment strategy can change based on your choice between long-term and short-term SIP investments.
Portfolio diversification: Spread your investments across several asset classes, such as debt, equity, and gold, to diversify your portfolio and reduce risk.
It is always recommended to take advice from a financial consultant before making any investment decisions. They will help you understand all elements in detail and make an appropriate decision possible. Further, discipline is highly important when investing in SIPs.
To conclude, compounding, rupee cost averaging, and flexibility in SIP investment enable people to increase their chances of earning a relatively better return over the long term. This article discussed the reasons behind SIP being an ideal investment choice and the suggestions for investing right. It is advisable for investors to regularly assess their SIP performance and adjust their investment strategy as required. This festive season, unlock the transformative power of SIP investments with Bajaj Finserv AMC. Choose your preferred scheme by visiting the investor portal and starting your SIP with a few clicks. You can also choose to invest with the help of a distributor.
About Bajaj Finserv Asset Management Ltd.
Bajaj Finserv Asset Management Limited, a wholly owned subsidiary of Bajaj Finserv Limited, has announced its presence in the investment solutions industry. Backed by one of India’s most respected and oldest brands, it offers a host of innovative products and solutions to every Indian. With a future-focused and differentiated investment strategy, its ambition is to help every Indian achieve his/her financial goals.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.