Choosing the right SIP can take you far
Talk to any financial advisor about equity investing and he is bound to recommend systematic investment plans (SIPs) to you. This is because it is extremely difficult for a lay investor to decide when to enter or exit the market, as the market generally sways to a host of factors ranging from international to domestic or even politics.
The biggest advantage of SIP is that it removes the element of timing, says Vineet Arora, head-product and distribution, ICICI Securities. You continue to invest small amounts over a long period of time, say, 5-10 years and you do not have to worry and the element of volatility is taken care of, says Sumeet Vaid, founder, Ffreedom Financial Planners. SIPs give you the benefit of compounding and averaging your investments, says Jimmy A Patel, CEO, Quantum Mutual Fund.
In short, SIPs help you average your investments and remove the element of market timing. So when the market falls, you get a higher number of units, while when the market rises, you get a lesser number of units, says Anup Bhaiya, MD and CEO, Money Honey Financial Services.
Most fund houses specify dates of the month, which you can choose for your SIP investments. So once you have selected the scheme and the amount to invest, you could start your SIP. You can either write post-dated cheques, or, if that is tedious, you can opt for an ECS mandate wherein an amount is deducted every month from your bank account.
Investment planners recommend that to get the benefits of SIP, you should invest for longer periods of time typically 5-10 years. However, of late, there are a number of ways in which you can do a SIP. While traditionally you could do SIPs only in mutual funds, today there are different ways in which you can buy stocks of your choice with the help of SIPs, or even exchange traded funds (ETFs).
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While the traditional way of doing a SIP was once a month, today you can do a SIP daily, weekly, fortnightly or even quarterly. Some fund houses also allow you to do a value SIP or STP , or a flexi SIP. Then, there are portals that offer you alert SIPs. As an investor what are the options available to you and how do you choose them?
MONTHLY SIP
This is the most traditional way of doing a SIP in an equity mutual fund. This works well most for salaried people, who get a monthly cash flow, says Vaid of Ffreedom Financial Planners. Investors tend to opt for a date between the 1st and 10th of the month, since most of us get salaries at the end of the month. Most investors tend to avoid the last 10 days of the month, on fear of exhausting their surplus money and not being able to meet their SIP commitment, explains Vaid.
The biggest advantage of SIP is that it removes the element of timing, says Vineet Arora, head-product and distribution, ICICI Securities. You continue to invest small amounts over a long period of time, say, 5-10 years and you do not have to worry and the element of volatility is taken care of, says Sumeet Vaid, founder, Ffreedom Financial Planners. SIPs give you the benefit of compounding and averaging your investments, says Jimmy A Patel, CEO, Quantum Mutual Fund.
In short, SIPs help you average your investments and remove the element of market timing. So when the market falls, you get a higher number of units, while when the market rises, you get a lesser number of units, says Anup Bhaiya, MD and CEO, Money Honey Financial Services.
Most fund houses specify dates of the month, which you can choose for your SIP investments. So once you have selected the scheme and the amount to invest, you could start your SIP. You can either write post-dated cheques, or, if that is tedious, you can opt for an ECS mandate wherein an amount is deducted every month from your bank account.
Investment planners recommend that to get the benefits of SIP, you should invest for longer periods of time typically 5-10 years. However, of late, there are a number of ways in which you can do a SIP. While traditionally you could do SIPs only in mutual funds, today there are different ways in which you can buy stocks of your choice with the help of SIPs, or even exchange traded funds (ETFs).
!
While the traditional way of doing a SIP was once a month, today you can do a SIP daily, weekly, fortnightly or even quarterly. Some fund houses also allow you to do a value SIP or STP , or a flexi SIP. Then, there are portals that offer you alert SIPs. As an investor what are the options available to you and how do you choose them?
MONTHLY SIP
This is the most traditional way of doing a SIP in an equity mutual fund. This works well most for salaried people, who get a monthly cash flow, says Vaid of Ffreedom Financial Planners. Investors tend to opt for a date between the 1st and 10th of the month, since most of us get salaries at the end of the month. Most investors tend to avoid the last 10 days of the month, on fear of exhausting their surplus money and not being able to meet their SIP commitment, explains Vaid.
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