Apart from the ease and convenience SIP offers, here are the reasons why investing in mutual funds via this mode is a great choice:
- Limited capital: SIPs can start with as low as Rs 100. This enables investors with low capital to generate higher long-term returns over the tenure with their limited monthly savings.
- Rupee cost averaging: The Rupee cost averaging strategy entails investing a set amount of money regularly, irrespective of whether the markets are rising or falling. This means that you get to buy more units when the market is low and fewer units when the market is high, allowing you to average the cost of fund units over time.
- Diversification opportunity: By broadening your SIP investment portfolio across equity funds, debt funds, and hybrid funds, you may limit market risks and stand a chance to earn consistent returns during downtrends or periods of high market volatility.
- Flexibility: The best SIP provides greater control over your investments, allowing you to start or stop them whenever you want. You can also pause a SIP and resume it afterward. No other investment method provides you with this level of flexibility.
- Compounding: SIP investments are meant to be long-term investments. Your SIP investments compound over time, resulting in significantly higher returns.
- Financial discipline: SIP teaches you financial discipline, which is critical for investing, especially when it comes to risky investments.
