Systematic Investment Plans (SIPs) are one of the easiest yet most powerful tools of investment where you commit to saving your earnings and investing periodically (monthly/ quarterly/half-yearly/yearly). It empowers you to start your investment tour by permitting you to invest with little amounts. Online investing through SIPs can assist you in accomplishing your objectives and instill economic and financial discipline.
SIPs use the strength of compounding when you invest for a long period. This states that you get an enhancement of not only your original investment but also of the amounts received as a dividend, interest, and capital gain.
SIPs in Stocks
SIPs in stocks mean establishing a constant plan of investment to invest in the stock market. The outcome will be wealth creation over your investment period by compounding the return and averaging out the market risk. Instead of online investing and stock trading via a lump sum, you can expand your investment by regular installments.
SIPs in ETFs
ETFs (Exchange Traded Funds) is a type of passive investment that provides liquidity, and diversification to investors. ETFs imitate the returns of indices such as Sensex or Nifty 50 and catch the stocks in the same ratio as that of the base index. In ETFs, fund managers alter the fund composition only if there is any alteration in the base index. Therefore, SIPs in ETF may assist investors in gaining returns that nearly match the base index.
Benefits of SIPs in stocks and ETFs
The key benefits of online investing in stocks and ETFs through SIPs are elaborated below:
- Pocket-friendly: Online investing through SIPs is ideal for the people who don’t want to invest a huge amount at one go in stock trading and ETFs. You can invest a fixed amount per month at your convenience. SIPs are the pocket-friendly path of investing money without having any load on your pocket. Thus, SIPs are convenient for investors of every type.
- Compounding effect: One of the most important benefits of investing through SIPs is that you find the chance to receive a higher capital using the effect of compounding. When you invest in stocks and ETFs through SIPs, the interest, dividend, and capital gain earned on the investment, is reinvested in the same stock or ETF.
- The comfort of investing: SIPs are one of the convenient and simplest paths of online investing. If you don’t understand the stock market, an SIP is ideal for your goal. You need to choose the best fund and provide instructions to the bank to operate the SIP investment.
- Safety from the uncertain stock market: SIP safeguards you from the uncertainty of the stock market. It protects you from panic decisions and speculations. When the stock market is uncertain and falling, you can collect more units of stock at a low cost.
- Emergency fund: If you invest the money in SIPs that are open-ended, you can emit your money at your choice. This flexible comfort of withdrawal can assist you in paying your expenses in an emergency.
Online investing through SIPs in stocks and ETFs can produce good benefits and assist you in getting your financial objectives by investing regularly. It is an investment that allows you to make a diversified portfolio. Thus, if you have not taken advantage of online investing through SIPs in stocks and ETFs yet, you should think about starting now.
