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6 Benefits Of Systematic Investment Planning

By Author: Swarali Chavan
Total Articles: 37

SIPs or Systematic investment plans are a convenient method of investments where an investor can invest a predetermined amount of money in mutual funds at regular intervals. The investment can be made on an annual, half-yearly, quarterly, monthly basis. This pre-planned systematic method of investing in mutual funds will enable the stakeholder for earning regular returns on the investments. There are a lot of advantages of SIP for an investor, they offer flexibility to the investors for managing their assets and investing money in the mutual funds, this is an efficient method which is really convenient for the investor as the pre-determined amount for the investment will debited automatically from the investor’s bank account and will be used for making investment in a particular mutual fund portfolio. An investor can also opt for systematic transfer plans if they want to periodically transfer a certain amount or switch certain units from one scheme and invest in another.

When an investment is made, additional units of an asset that are available under the mutual fund scheme will be purchased and will be added to the investor’s account.

6 benefits of SIP:

1. Compounding benefits:
As the investor will make an investment over regular intervals, the investments gather more money over time. The funds will mature and earn good returns if the investment is made early.

2. Rupee-cost averaging:
When an investor goes for SIP, they need not rely on speculation for making money in mutual funds. As the stakeholder will make regular investments, the volatile market does not affect the average cost per unit. An investor can buy more units when the price is low and less units when the price is high. This will help maintain the balance if there are any losses which might incur due to market fluctuations.

3. Systematic savings:
SIP mutual funds will encourage regular savings so the investments can be made at a chosen frequency. This will lead to a disciplined saving which alternately results in successful mutual fund investments.

4. Flexibility:
SIP offers the flexibility of investing in a mutual fund over a long period of time. There is no specific time limit during which an investment has to be made. An investor can also choose to opt out of a SIP whenever they wish to.

5. Long-term Gains:
One of the best benefits of SIP is that they offer long term gains. Due to the benefits of compounding and rupee-cost averaging, an investor can gather good returns on investments in the long-term.

6. Convenience:
SIPs are the most convenient forms of investing in mutual funds. The investor just has to provide their financial institutions with the instructions and the amount for investing will be debited automatically from their account.


Author Bio:- Swarali Chavan is a finance professor who loves study about market investment instruments. She has written on systematic transfer plans. Through this article, she has provided detailed information on all you need to know about systematic transfer plans.

Total Views: 38Word Count: 482See All articles From Author

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