In comments and in emails I get many questions from readers where they want to know if they should do a systematic investment plan aka SIP or go for a one time bulk investment.
So today I will give you 3 more good reasons for investing through SIPs
1. Light on Wallet
I am sure there will very few who would argue on this. Investing 10,000 per month will not hurt your wallet as much as one time investment of 100,000.
2. You do not fall prey to Timing the market
Time and again I always say this “It’s not important to time the market (and no one can) but more important is the time in the market” and if you start investing in SIP you by default make sure that you are a long term investor not looking to time the market. This also has added advantage of avoiding crappy trading tips from your broker.
If you invest each month you are not only compounding your investment but also your profits and the sooner you start working on your investment the better. See the example below.
Let us say that you invest 1,000 Rs each month. For the sake of calculation we consider interest rate of 10% per annum in equity where as SIP returns for last 3 years are higher than 15%. Let us see what we stand at.
After 20 Years we are at Rs 768,030.
After 30 Years we are at Rs 2,183,321.
After 40 Years we are at Rs 5,854,221.
And you can see that it almost triples every 10 years.
Over to you
So have you done your SIP yet? Share your SIP investment figures in comments for others to learn.