How a Systematic Investment Plan can help you increase your wealth?
August 08, 2019
Be it long-term wealth creation or earning higher returns than traditional investment options over a shorter tenure, Systematic Investment Plans (SIPs) are ideal for every investment objective. Read this post to know how SIPs help you grow your wealth.
SIP provides retail investors with an investment vehicle that not only has exceptional growth potential, but also mitigates risk in the long run. Be it a long-term or a short-term financial objective; SIP investment is one of the best due to the host of benefits it offers. With SIP, you can start investing with a minimum amount and adjust the amount as and when needed. Let us have a look at some reasons and ways how SIP investment plan can grow your wealth and help you achieve your financial objectives:
Compound interest means earning interest on the interest you’ve already earned. The same compounding benefit also works in SIP. When you go with the growth option for your SIP, the dividends you are entitled to receive are again invested in the mutual fund scheme to help you earn returns on the returns that you’ve already earned. In the long run, this can significantly increase the value of your investment.
Schemes for every investor
You can start an SIP in any mutual fund of your choice. To suit different investors, there is a wide variety of mutual fund schemes. There are equity funds for long-term wealth creation, debt funds for shorter investment tenure, tax-saving funds to save taxes and many more. Options allow you to start SIP investment online in a scheme that perfectly suits your risk appetite and investment objective.
The working of SIP is as such that it eliminates the need for the investor to do anything. Just start the SIP and make sure that your bank account has the SIP amount on the debit date each month. The mutual fund company will automatically debit the SIP amount and invest the same in the selected scheme. This ensures that you regularly invest without fail. This disciplined investment approach is another significant contributor to the wealth-generating ability of SIPs.
Most of the Asset Management Companies (AMCs) now also allow you to track your SIP investment online. With the help of this feature you can easily track the growth of your investment and make changes as and when needed to meet the objectives.
Moreover, a lot of AMCs now have something known as SIP investment calculator to help you get an idea of what your SIP investment can deliver over the years.
Step-Up or Top-Up Facility
One of the latest offerings of AMCs is the top-up facility. It eliminates the need for you to increase the SIP amount manually. Just fix a percentage or an amount by which you'd like to increase the SIP amount along with the duration at which the increment should be implemented to get the SIP amount increased automatically. As the SIP amount grows consistently, so do your returns. This can help you achieve your objectives sooner.
Creating wealth with SIPs
Now that you know how to start SIP investment and how it can help you earn handsome returns, it is time that you start focusing on the different types of mutual fund schemes available.
It is only after understanding the different types of schemes that you would be able to select ones that best suit your profile.
The contents of this document are meant merely for information purposes. The information contained herein is subject to update, completion, revision, verification and amendment and the same may change materially. The information provided herein is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person‘s nationality, residence or otherwise) be contrary to law or regulation or would subject lClCl Bank or its affiliates to any licensing or registration requirements. This document is not an offer, invitation or solicitation of any kind to buy or sell any security and is not intended to create any rights or obligations. Nothing in this document is intended to constitute legal, tax, securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. Please obtain professional legal, tax and other investment advice before making any investment. Any investment decisions that may be made by you shall be at your sole discretion, independent analysis and at your own evaluation of the risks involved. The use of any information set out in this document is entirely at the recipient’s own risk. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith by lClCl Bank and from sources deemed reliable. There can be no assurance that such projections will prove to be accurate. lClCl Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. ‘lClCl’ and the ‘I-man’ logo are the trademarks and property of lCICl Bank. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.