6 Reasons Why SIP is Important

Systematic Investment Planning (SIP) is offered by Mutual Funds to investors for investing a fix amount for a pre-set time for the selected mutual funds.
Investing small amounts each month now, will give you financial freedom in the later years of your life.
It has become a common notion that SIP is the most appropriate way of investing in the mutual funds.

6 reasons why SIP is ideal in each household:

  • Creates Monthly Saving: SIP is a great way of saving monthly. There is prefixed date and amount on which it will be debited from your bank account that will create discipline and the habit of saving money monthly. There is flexibility in choosing the date of your SIP.
  • Any Amount can be Invested: SIP allows investments as low as Rs. 500. You can start by taking small steps towards your life goals while you get comfortable with investing in Mutual Funds and monthly investments. You do not have to wait to earn more and invest in large sums.
  • Liquidity: There is flexibility in buying and selling the units of mutual funds. Anytime money is required, withdrawals can be easily made, and money gets credited in the bank account after 3 working days.
  • Flexibility: SIP can be easily changed – Scheme, Amount, Duration, Date etc.
  • Less Worry of the Market Fluctuation: In SIP investments are made on a regular basis, so you invest through all the market fluctuation, in highs and in lows, which benefits you by avoiding risk of timing the market.
  • Tax Efficient: SIP in Equity Mutual Funds is very tax efficient. Profits are taxed at only 10% for long term capital gain if invested for more than a year, and 15% for short term capital gain if invested for less than 1 year.

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