SIP

In this fast paced world where Patience & consistency is becoming words of past when it comes to building wealth & achieving your financial goals, there is one tool that personifies these words like a Pro!

SIP or Systematic Investment plan (I prefer calling it Sabse Important Plan!!) is one such tool that when used, it not only builds your wealth, but also makes sure that all your dreams & goals like child’s education, Retirement, Passive Income, International Vacation, buying a house is fulfilled without having to worry about financing it from your current income.

SIP or Systematic Investment plan is a disciplined way of investing in Mutual funds on regular basis which is automated & requires your minimum or no interference. It can be done daily, weekly, monthly, quarterly or half-yearly.

SIP runs on the Law of Compounding (aka Compound Interest), Compounding is nothing but earning interest over interest or returns on the returns earned. This powerful law can multiply your wealth in a manner that may not make sense to most people at the beginning but with patience & discipline, it will all make sense & before you know it, you will be ready for your future expenses.

It all starts with a need or a goal that you set for yourself. For eg: Buying a house after 10 years, Sending kid abroad for higher studies after 12 years etc.

Next you set an amount to it by determining how much will be required to fulfil the goal at that time in future. Now that you have set the timeline & amount required. Next step is to calculate, the amount of SIP & the frequency that would be required to start investing now, to achieve the target amount in that specified year. This is usually done with the help of an expert or a Professional as it requires precise calculations.

As the goals, amount & timeline is set, you start your SIP or systematic investments & automate it with a standing mandate to your bank.

Once your SIP’s have been started & linked with the specific goals, only thing left to do is review it annually. Since the markets & funds are unpredictable & the rules & regulations keep changing from time to time, it becomes difficult for you to keep a track of all the funds or opportunities available. Hence, review must be done with a financial advisor or personal finance professional who would be able to analyze & suggest the correct course balancing your risk & returns.

UPGRADE YOUR SIP’s

There are different tools to enhance your SIP’s like Flex SIP or Top-up SIP which boost your SIP when required. Flex SIP is when SIP amount automatically increases or decreases depending on the market valuations & movement (The upper & lower limit of the SIP is pre-defined). This helps you to maneuver through the market volatility. A Top-up SIP is when you set up a top-up amount or a percentage at periodical intervals to your SIP (also pre-defined), so that your SIP increases with an increase in your disposable income.

The best part is that everything can be automated effortlessly!

Some theories suggest that SIP is not a guarantee for creating wealth or SIP is risky as it is market linked. Undoubtedly SIP’s are risky but the level of risk depends on how & where you start your SIP’s. So, it is best advised to consult a Financial Advisor before you embark on this journey as risk can be greatly minimized with the right approach.

It has been proved that SIP is the best tool to invest when you have a longer time horizon. Though the returns may not be guaranteed but data proves that the longer you stay invested, the lesser is your risk as Mutual funds are managed by professional & experienced fund managers & are far better at understanding the risks than most people.

Many people have achieved their goals & dreams with SIP. This was possible only with a disciplined approach & clear roadmap. In a country like India where the average inflation is 6-7%, the only tool that can beat the inflation & create wealth is SIP in Mutual funds.

After all, as they say #mutualfundssahihai #advisorzaroorihai