Different Reasons to Start SIP for First-Time Investors

Investments are an absolute necessity in these turbulent times for professionals irrespective of their age and income. Gone are the days when we depended on savings or property to meet our financial needs. A person’s financial goal should be set up early in his professional career and he should plan wisely to reach that. Prioritizing goals and choosing the right investment schemes are part of financial planning. Investment can be of many types. You may invest in real estate, gold, Fixed Deposits, Share markets, and others. The selection may depend on your financial goals, income, age, risk-taking capacity, etc. Most people still consider investing in the share market as a risk because of the volatility of the market and the uncertainty involved with it. A safer option for first-time investors can be investing in SIPs.

How to start with SIPs?

If you are a newbie and not sure how the mechanism works, you can use the SIP investment calculator which is a simple tool that gives you a rough estimate of the returns on your SIP investments. This is a great tool to plan your investments toward reaching your financial goals. 

Why should I invest in SIPs?

SIP or Systematic Investment Plan is a well-proven mechanism that allows the investor to average out the cost of shares or units that they purchase over a period. This is a mechanism that gives you more returns against smaller but periodic investments. As compared to a lumpsum investment, where the returns are pre-calculated and fixed, SIPs need money invested in smaller amounts but periodically for higher returns in the long term. The money invested on a regular basis is used to build a portfolio comprising multiple mutual funds and blue-chip stocks. The mechanism makes you buy more units with the same amount of money when the price is low and buy lesser units when the price is up. 

Some additional benefits include:

  • No need to time the market if you choose to invest in mutual funds via an SIP
  • Not only from an investment perspective, but you also get tax-saving benefits under Section 80C if you invest in SIPs 
  • Moreover, most of the SIPs available in the market offer insurance coverage against death and disabilities. So, you get protection along with a return on investment
  • Once you invest in an SIP, you need not bother about the market ups and downs

You can gain more insights about SIPs from various Share Market apps and MO investor App available online. Some apps provide deep insights, explanations, and futuristic predictions on market performance. Also, some apps provide a stock trading platform where you can invest in the share market against a nominal or zero brokerage fee.  

SIPs – the best financial tool to invest for beginners

Many mutual funds in India have special SIP schemes, most popularly 3-year or 5-year plans available for retail investors. The top equity funds in the market available are Mirae Asset Large Cap Fund, Axis Bluechip Fund, ICICI Prudential Bluechip Fund, and SBI Bluechip Fund. 

According to experts, this is an ideal investment for small investors and salaried employees. Conclusively, SIP is the best possible way to plan your expenses better and achieve your financial goals.

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