Jan 01, 1970 3 min read

Don’t Compromise on Your Goals Due to Market Trends - Invest Via SIP

Stop compromising your returns due to equity failure, and start earning more. Know how!
Do you know why equity investments are riskier than the others? It is because they object towards the long-term goals, and in the long duration, the market tends to face many fluctuations which make these investments more volatile. Let’s take a case to understand how we can make money effortlessly from equities while getting least affected by the market swings.

Mr Ram had many dreams like owning a brand new car, a big house, well-settled retirement, etc., and to achieve these goals he started investing in stocks and shares. It was unfortunate for him that without knowing the risk involved in the share market, he jumped into it. With little financial knowledge, he failed to time the market and faced losses. Resultantly, he decided not to invest in equities anymore, and his dream of becoming rich got compromised.

If you too have little knowledge of financial jargon and have long-term goals to be achieved, do not bother about the market trends, rather invest in equities through SIP. The reason being is that it is the best way of making wealth these days. It allows you to create a corpus over a period of time while getting least affected by the market volatility. It is a reasonable and flexible style of investment which allows you to park your monies in various instruments available in the market. It is the most convenient way of building wealth as it can be started with a minimum amount of Rs. 500. There are many other features of SIP as well which prove it to be the best way of investment and allows you to earn wealth effortlessly. However, the major two are:

1. The Power of Compounding : The investor of SIP enjoys the benefit of the power of compounding. The compound interest helps you to earn exponentially on your investment over a period of time. For example, if you start investing Rs. 10,000 per month at the age of 40 years, by the age of 60 you will invest a total of Rs 24 lakhs. If your investment grows by an average rate of 7% a year, it would be worth Rs. 52.4 lakhs in 20 years. However, if you would have started investing ten years earlier, assuming the same rate of 7%, you would have earned Rs. 1.22 crore at the age of 60. This is how the power of compounding works, with more time it adds high values to your investment. Hence, “Think of each SIP payment as laying a brick. One by one, you’ll see them transform into a building.”

2. Rupee-Cost Averaging : It helps in adjusting the risk from market volatility in the long run. This feature of best SIP investment plan allows the investors to buy more number of units when the prices are low to adjust the fewer units purchased during, the dearer market. Normally, in the long run, the market faces many ups and downs due to various causes which ultimately affect our investments. But, rupee-cost averaging helps to fight against this problem by making adjustments in the price valuations during different markets. Let’s take an example to understand this concept more clearly:

In the above table, the investor invests Rs. 4000 per month through SIP for the period of six months. Suppose, he had invested via lumpsum; then he would have purchased 600 units at the rate of Rs. 40 each. At the end of June, when the unit price in the market is Rs. 35, his/her investment would worth Rs. 21,000 (600*35) which is a loss of Rs. 3000. But, fortunately, the investment was made via SIP which allowed the investor to invest at a regular interval and different market prices. The total investment grew up to Rs. 24,695.53 (740.94*33.33) at the end of six months.

Therefore, in every prospect, we can see that SIP provides flexibility in investment and enables to achieve big financial goals effortlessly. So, don’t waste the power of your money and let it grow by investing in various best-performing schemes through SIP. You can choose the best SIP for your portfolio from various best-performing schemes of top AMCs at MySIPonline.

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