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    Here's why you should invest in SIP as soon as possible

    Here's why you should invest in SIP as soon as possible

    Here's why you should invest in SIP as soon as possible
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    By Anshul   IST (Published)

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    Systematic Investment Plan, commonly referred to as SIP, allows investors to invest regularly a fixed sum in mutual fund (MF) schemes.

    Systematic Investment Plan, commonly referred to as SIP, allows investors to invest regularly a fixed sum in mutual fund (MF) schemes. Under this, the set up is such that the money is automatically debited from the bank account on a fixed date.
    According to experts, choosing the SIP route is the best way to invest money in mutual funds for monthly salary earners. Any individual ready to invest should go for SIPs as soon as possible.
    Here are 3 reasons why one should invest in SIP:
    Creates financial discipline
    SIP allows investors to park money in small amounts and at regular intervals. This inculcates a habit of regular saving and investing and hence build a financial discipline in the life of the investor.
    There are several SIPs available in the market that can be chosen as per the financial goal and risk appetite of the investor. It can be started with an amount as low as Rs 500.
    Helps in long-term wealth creation
    SIP allows an investor to put the money at different levels of the market cycle. This helps in long-term wealth creation. At times when the markets are high, the monthly SIP would buy fewer units and when the markets are low, the same monthly SIP amount would buy more units.
    This means, over time one can earn a solid return, without paying very high prices for any unit.
    Rupee cost averaging feature
    SIPs average out the risk of equity investment over a period of time. This phenomenon is called rupee cost averaging.
    By enabling investors to buy more units of a mutual fund when the market is low and reducing the per-unit cost of investment, it ensures that investors don’t go overboard during good times and don’t stop investing during the bad.
    If an investor puts a lump sum in the market, there is always the risk of losing out a major portion of the investment in case of a crash. However, with SIPs, the money is spread over time and only some parts of the entire investment are likely to face the market volatility, according to Archit Gupta, Founder and CEO, Cleartax.
    Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
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