SIP lets you choose how much money you want to invest and for how long, making it flexible for your financial goals. SIP has become popular in recent years, and the data from AMFI shows that it reached ₹9.95 lakh crore assets in December 2023. However, a significant number of People only engage in SIP once, often neglecting the consistent attention it requires to foster substantial growth.
Even though SIP can help you grow your money, it’s important not to just leave it alone. Experts say you should stay active, and here are five reasons why:
When prices go up (inflation), it’s harder to reach your money goals. Just relying on fixed investment plans won’t be enough. To tackle this, you need to put more money into your investments, including your SIP, especially when you get a salary raise.
Maximizing Compound Interest
The power of compounding is increased by increasing your SIP installment, and the potential return allows you to create a larger corpus to meet your long-term financial objectives. Increasing your monthly SIP installment each year may help you achieve your goal of having a sizable sum in your hand after 10 or 20 years. In the long run, even a small increase now can have a significant impact.
Here’s our simple SIP Calculator to calculate your expected returns and get started with raising your SIP Investment now.
Diversification and Portfolio Growth:
When you boost your SIP, you get the chance to spread your investments across various types of assets or funds. This diversification helps you choose the best mutual funds, manage risks and could enhance the overall performance of your investment portfolio. So, increasing your SIP doesn’t just grow your money, but it also adds a layer of smart planning to your investment strategy.
SIP not only gives you flexibility with your investments but can also be a smart move for tax planning if you have the means to increase it. Boosting your SIP can be a tax-efficient strategy to manage your extra income. Certain mutual funds, when invested in, may provide tax benefits, adding an extra layer of advantage to your financial planning. So, as you consider increasing your SIP, keep in mind the potential tax advantages that can come along with it.
Rupee Cost Averaging
SIPs offer an additional advantage known as Rupee Cost Averaging. This means that when you invest a fixed amount regularly, you end up buying more units when prices are low and fewer units when prices are high. So, even if the market goes up and down, this strategy helps balance out the overall cost of your investments over time. It’s like getting the best value for your money, making your SIPs even more effective.
For savvy and well-informed investors, enhancing the strength of your SIP on a yearly basis can be a lucrative option. Opting for an online mutual fund SIP is the smart choice, as it eliminates the hassle of offline transactions and streamlines fund administration.
Gradually increasing your SIP investment in a disciplined manner allows you to manage costs effectively over time, providing a buffer against market volatility and eliminating the need to time your investments. This approach ensures a smoother and more efficient investment journey.