Systematic Investment Plan (SIP) is a popular investment option for generating wealth in the long term. It is a disciplined way of investing in mutual funds, where investors invest a fixed amount regularly at pre-determined intervals. SIPs are an excellent option for investors who want to invest in mutual funds but cannot invest a lump sum amount at once.
Investors can use SIP calculators available on various mutual fund websites to calculate the amount they need to invest monthly to reach their investment goals. To achieve an investment goal of ₹100 crore in 30 years, one needs to maintain a 20% annual SIP step up, according to wealth management experts.
While SIPs are a great way to invest in mutual funds, investing only on market dips can generate better returns than regular SIPs. This strategy is known as Value Averaging Investment Plan (VAIP) and involves investing more when the market is down and less when the market is up, producing an extended internal rate of return.
A SIP involves making a disciplined investment in a pre-identified mutual fund scheme at regular intervals. The amount invested is deducted automatically from the investor's bank account, making it a hassle-free investment option. SIPs are also a low-risk strategy for earning from capital or secondary markets.
Investors can choose from various SIP options available, such as weekly, monthly, or quarterly SIPs, depending on their investment goals and risk appetite. They can also select the duration of the SIP and the mutual fund scheme they want to invest in.
A Moneycontrol analysis shows that 5-year SIP return calculated for MC30 debt schemes outperformed the FD rates for the respective period of 60%. This proves that investing in mutual funds through SIPs can generate better returns than traditional investment options such as fixed deposits.
SIPs have long been considered the optimal method for investors to accumulate wealth through mutual funds. They provide the benefit of rupee cost averaging, where investors purchase more units when the market is down and fewer units when the market is up.
In this episode of the Portfolio Podcast, Parv Shah and Vishal Balabhadruni talk about planning SIP investments. They discuss the benefit of SIPs, how to choose the right mutual fund scheme, and how to calculate the amount to invest using SIP calculators.
In conclusion, SIPs are an excellent investment option for investors looking to generate wealth in the long term. They provide the benefit of rupee cost averaging and are a low-risk strategy for earning from capital or secondary markets. Investors can use SIP calculators to calculate the amount they need to invest monthly to reach their investment goals. By investing in mutual funds through SIPs, investors can generate better returns than traditional investment options such as fixed deposits.