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Tag: systematic investment plan

  • Why SIP Is Important For You

    Putting money into mutual funds through a structured investment plan (SIP) has become very common. Read on to find out why mutual funds are such a good way to invest and how SIP can help you reach your long-term financial goals. Looking for good stock trading platforms? We offer the best online trading platform and the lowest brokerage for intraday trading. Everyone has hopes, dreams, and goals they want to reach. Everyone wants to feel safe about their money. For example, a new car, a bigger house, or a trip with the whole family to a faraway place. But you can only reach your goals if you put in the work that is needed to make them happen. Investing in mutual funds through a Systematic Investment Plan (SIP) could be a simple way to help you reach your goals. So, let’s look at what SIP stands for, how they work, what the benefits of SIP are, and how investing in SIP can make it seem like you can reach your financial goals.

    HOW DOES SIP WORK?

    A Systematic Investment Plan, or SIP, is an investment in a mutual fund that lets you invest slowly over time. It is a way to invest fixed amounts of money on a regular basis, such as monthly, quarterly, or every six months. If you invest consistently in this way, you may find it easier to reach your financial goals. To make money, you don’t have to time the market. With SIP investing, this uncertainty is taken away. Once you’ve chosen the term and frequency of your investments, you can choose to have them made automatically. Then, tell your bank to regularly move money from your bank account to the SIP mutual fund of your choice.

    WHAT’S GOOD ABOUT SIP IN MUTUAL FUNDS?

    The investments are not affected by the volatility of the market. The markets show what’s going on in the economy, and just like the economy, the markets go up and down. So, a drop in the market could wipe out some of your gains, but a SIP can turn this to your advantage. One of the benefits of SIP is that it keeps investors from gambling in markets that are very unstable. Investors may buy more units when the market is low and fewer units when the market is high. Because of this, the long-term average cost of each unit is expected to be less, and the returns on investments are good. Because you invest every month, the NAV of each scheme changes, so the number of units you get each month also changes. When the market goes up, the price goes up every month, and you get fewer units. When the cycle turns and markets start to fall, the price to buy drops and you start to get more units for the same amount of money. Rupee Cost Averaging is the process of investing at different times in the market so that the costs are spread out over a longer period of time.

    HELPS TO BUILD CORPUS WITH SMALL AMOUNTS

     Another benefit of SIP investment is that it lets you put as little as Rs. 500 per month into mutual funds. Even if you don’t have a lot of money, you may be able to benefit from India’s growth by investing in mutual funds. This could be a cheap way to put money away every month without going over budget. With the SIP step-up feature, you can increase the amount you put away each month as your income goes up. Investors can also add more money to their SIPs regularly through mutual fund firms. With a systematic investment plan (SIP), you invest the same amount of money in a mutual fund scheme every month. Over time, this adds up to a large corpus. One of the main reasons why your savings grow is because of compounding. Because mutual fund returns are re-invested and you get returns on your returns, you benefit from compounding, which is a simple but powerful force.

    YOU BECOME MORE DISCIPLINED WITH YOUR SAVINGS

    One of the most well-known benefits of SIP investments is that they allow investors to save money in a structured way. Also, a monthly budget helps teach people to be responsible with their money. SIPs are very flexible, so they can be stopped at any time and the amount invested can be increased or decreased. By using SIP to save first and spend later, you can follow the golden rule of personal finance. Now, all you have to do is pick a monthly SIP date that matches the date you get paid. And before you start spending, every month you’ll end up investing.

    BOTTOM LINE

    Investing in mutual funds through SIP has many benefits besides the top three listed here, such as convenience, diversification, flexibility, no fees to start a SIP, etc. Also, SIP goes against the idea that making money requires a lot of work and planning. In reality, SIP shows that you should avoid complicated investment strategies like “timing the market” and instead invest regularly to keep your money in good shape. If you are looking for a good stock trading platform, then check out Zubu’s website for the best online trading platformonline trading platform and lowest brokerage for intraday trading.

  • The What, How and Why of SIPs

    SIPs are simply the way in which you plan your investments. You can start investing little sums, one instalment at a time, over a period of years with the help of a SIP investment and develop your wealth.

    Compounding is at work here, and if you keep investing for a long time, it will pay off handsomely. It is the amount of time you spend investing that matters, and not when you start investing.

    When it comes to starting investments today, the first two things that come to mind are mutual fund investments and systematic investment plans (SIPs). Mutual funds can help you not only build wealth but also save money and achieve financial independence. SIP investments, like mutual fund investments, are becoming increasingly popular.

    SIP allows you to buy mutual fund units at your convenience and within your budget. To minimise any last-minute payment inconsistencies, investors usually strive to maintain the SIP debit date close to the salary date. The money is automatically deducted from your bank account based on the bank’s standing instructions. It also helps in the formation of financial discipline in investors.

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    How Do You Begin SIP Investing?

    You can purchase mutual funds directly from direct fund companies, either online or offline, or both. Depending on your option, you can open a SIP account by visiting your nearest bank or by going online. The funds can be purchased in a flat sum or over time through a systematic investment plan (SIP). Agents can also assist you in purchasing mutual funds. To begin trading, all you need to do is open a trading account and complete the mandatory KYC. And we at Zebu are here to help you with that. Please get in touch with us to know more about investing in SIPs and how you can build your wealth.

    How Do You Pick the Best Mutual Fund?

    There are so many investment options available today that deciding which one is best for you can be incredibly challenging.

    The various mutual fund plans are further classified as equity, debt, or hybrid funds. The mutual fund you’ve chosen should be a good fit for your long-term objectives. If your objective is to retire early, for example, you should choose a fund that will help you increase your money in the shortest amount of time. Make it a point to look at the fund’s long-term record, the fund manager’s performance, and the expense ratio. All of this information can be found on the fund’s website.

    Which Option Should You Pick?

    Almost all of the funds available these days provide you with the option of choosing between two options: dividend or growth. If you choose the dividend fund option, you will be paid on a regular basis according to the fund’s due date.

    The growth option, on the other hand, allows you to reinvest your dividends, resulting in higher returns and a higher net asset value. Depending on your needs and preferences, you can select one of the two possibilities.

    Which should you choose: Direct or Regular?

    Almost every fund on the market today has two options: direct or regular. There are no intermediaries in the direct one because it is sold straight by the fund houses. The traditional one has agents and mediators in the middle, resulting in a greater expense ratio and lesser profits. Direct funds are a superior option if you’re seeking long-term investment options.

    What should the quantity of investment be?

    The biggest advantage of SIP investing is that you can invest any amount you like, even as little as INR500 every month. Minimum values vary depending on the scheme. You can use a SIP calculator to figure out how much to invest in order to get the desired end result.

    For example, if you require Rs 1 crore in the next 20 years, you should invest INR.10000 every month in a scheme that will provide you with 12% annual returns.

    Returns

    All of the funds’ returns are calculated according to the specified dates, and they are also available on the fund’s website. Take your time to learn about the fund’s short and long-term returns to gain a clear picture of its performance.

    Risks

    There’s an old adage that great risks lead to great rewards. SIP investments work in a similar way. You can easily earn some decent profits if you are ready to take chances. The returns are primarily determined by the market’s volatility and how it operates.

    The equity funds are invested in stocks, and the returns are entirely contingent on the stock’s market success. Debt funds are low-risk investments that often invest in government bonds and treasury bills, among other things. However, due to the microeconomics involved, even these cannot be considered risk-free.

    Tax

    When you try to redeem your investment after the fund’s duration has ended, the units you invested are redeemed on a first-in, first-out basis. The units you bought, in the beginning, will be redeemed first, followed by the units you bought afterwards.

    Long-term capital gains tax exemption is available for equity funds that are considered long-term investments. If you opt to redeem stock units before the one-year period is through, you will be subject to a 14.5 per cent short-term capital gain tax. For an amount up to Rs 10 lakh each year, equity returns are tax-free.

    Debt fund investments are only deemed long-term investments until they have been successfully completed for three years, at which point you will be eligible for tax benefits. This money is taxed at a 38.45 per cent rate.

    How do you keep track of your SIP?

    SIPs, like any other investment, must be tracked. You just cannot leave them unattended, despite the fact that they are considered safe and reliable. The performance of mutual funds can be tracked using their statements. If you notice any discrepancies and the fund’s performance falls short of your expectations, you can switch it at any time or redeem the units you deposited.

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