How a Systematic Investment Plan can help you increase your wealth

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:

Compounding benefit

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.

Regular investment

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.

Online monitoring

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.

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