Systematic investment plans, or SIPs, are a popular investment terminology. SIPs have been touted as being the ideal way to invest and build wealth over the long-term. Every investment expert talks about SIPs in such a way that investors might think they are the cure to all ills. But is investing systematically really as great as it is made out to be?
Let’s look at the benefits of systematic investment plans to answer that question.
Disciplined investing approach
Protect yourself against market volatility
Timing the stock markets is one of the toughest things for an investor to do. Often, it is also not necessary because of the risks it carries. Investors often worry about when and how much to invest. SIPs take this worry away. A systematic investment plan is a disciplined way of investing a fixed amount at regular intervals. By eliminating the need to constantly monitor the markets, it helps protect the portfolio against market volatility.
Rupee cost averaging
Buy more when the price is low, less when the price is high
When you are investing via SIPs, you are investing a fixed amount on a fixed date. If on that date, the stock price is high, you will a lesser number of shares. And vice versa. This ensures that you invest more at lower prices and less at higher prices, and hence your overall cost of acquisition gets averaged out.
Magic of compounding
It’s all about time in the market, not timing the market
The key to becoming wealthy is not only to start investing early but to also continue investing and stay invested. When you stay invested, you starting earning returns on not only the new amounts you invest but also on the returns you have already earned. This is called compounding and it works like magic to help you build wealth.
How to invest via SIPs in smallcases?
Buy & Start SIP:
With smallcases, it is easier than ever to adopt the disciplined investing approach. You can now buy a smallcase and start a SIP reminder for it in just 1 click!
2 important things:
- SIP orders are not placed automatically.
- You will be notified on SIP due date via email and push notification.
SIP amount:
You can now start a SIP for an amount which is less than the minimum investment amount for the smallcase. For example, the minimum investment amount for the IT Tracker smallcase is ₹ 19,384 but you can choose to start a SIP for ₹8000. The minimum SIP amount for any smallcase should be equal to or more than ₹5000.
When you are buying a smallcase, the SIP reminder option is checked and the SIP amount is chosen by default based on the smallcase. After you have completed the purchase, you can edit the SIP configuration any time.
Editing SIP configuration:
- Click on ‘Investments’
- Click on your invested smallcase
- Click on ‘Edit SIP’
- Set the Frequency, SIP amount and SIP date as desired
- Click on ‘Save SIP Settings’
As an investor, it’s wise to look at the long-term horizon for your investments and starting an SIP is a very important part of the process. With these new features, we strive to make your investing experience even better.
