We all have dreams and desires which we wish to achieve but very rarely do we pen down these goals and follow a systematic approach to achieve them. There are numerous goals in life with varying timelines, such as, buying a house of your own, going for an exotic holiday, planning for your children’s education, retirement, etc.
If we wish to achieve all these goals without having to make a choice between any of these it is very important that we have an investment plan. An investment plan is a map to get to your financial goal as it helps you to set your destination and the path to get there.
In today’s time, mutual funds have become an integral part of the goal planning for most of the retail investors, and an increasing number of them, rely on investments in mutual funds to meet their financial goals. However, even with regards to investments in mutual funds SIP is an excellent tool and should be used efficiently in goal planning.
SIPs are a simple, smart and hassle-free way to start your investments and reach your financial goals with ease. SIPs allow you invest your savings regularly in a systematic manner in varied asset classes, unique to your investment needs after taking into account your risk profile. Here are some of the important benefits of SIPs which make them quintessential for your goal planning:
A disciplined approach to investing
The key to achieve any future goal is to consistently work towards it. Similarly, for any financial goal that you wish to achieve you need to consistently keep saving and investing towards the same. Investments through SIPs help bring about the much needed financial discipline. Once you start a SIP a fixed amount is auto-debited from your account. Thus, SIPs help bring about the much-needed discipline as you are able to invest periodically without getting influenced by market conditions.
Small beginnings to bigger dreams
The beauty of SIPs is that it enables you to nurture your dreams from the start of your career. You don’t have to worry about having a surplus in hand to start investing. SIPs are the building blocks of your investment journey and reach your goals effortlessly.
Power of compounding
Power of compounding, they say, is the eighth wonder of the world. Investments made today will grow into a large corpus eventually due to the magic of compounding. Even if you do not have a huge lump sum to invest you can always start with a monthly SIP of any amount and due to the effect of compounding over the years help in the process of wealth creation.
Rupee cost averaging
Market volatility makes it extremely difficult to time the market and many times investors miss out making investments as they fear about the entry and exit time in the market. SIPs minimise the risk associated with market volatility as over a period of time they average out the buying cost for your investments.
Flexibility to plan your investments as per your requirement
SIP’s provide you the flexibility to make investments as per your unique requirements. Depending upon how much time you have to achieve your goal you can choose the SIPs as per your convenience. For example, if your financial goal is one year away, you can start SIPs in an ultra-short-term debt fund. Likewise, if your goal is retirement planning, you can start SIPs in equity funds investing in mid and small cap companies.
For any journey in life that ensures you embark, having sufficient time in hand is always a smart way to begin. Similarly, for all your financial goals, the more time you let your investments grow, higher is the corpus created due to the power of compounding.
SIP is an ideal route to start your investment journey and linking your future goals to your SIPs can help you immensely. So, fully embrace the power of these SIPs and start with a small but significant contribution towards achieving financial freedom.