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Systematic Investment Plans, also known as SIPs, are a great way to invest in the stock market. It is a simple and easy way to regularly invest a small amount of money in the stock market for short-term and long-term growth.<br>
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Myths About Systematic Investment Plans(SIP) in India Systematic Investment Plans, also known as SIPs, are a great way to invest in the stock market. It is a simple and easy way to regularly invest a small amount of money in the stock market for short-term and long-term growth. It is one of the best investment plans that you can take up to build wealth over the long term. SIPs can be started with as little as Rs 500 per month, and you can continue investing in it for 5-10 years or more, depending on your requirement and risk appetite. To know more about SIPs, feel free to call us at – 0120 4400700 5 Myths About SIP in India Myth 1: Investment in SIP is not Efficient We need to understand why this is false and how a SIP works. The idea behind SIPs is that you invest a fixed amount into the market regularly, say monthly or quarterly. This ensures that your investments are spread out and are not concentrated in only one or two months. This helps you avoid buying high and selling low, which could reduce your returns significantly over time. Also Read - Step-up SIPs Myth 2: SIP investments are complicated and risky
SIP is a simple way to invest, which can be started by anyone. It does not require a high level of knowledge or financial sophistication, just the willingness to keep regularly contributing over time. SIPs can be set up by anyone in any fund house, through their bank accounts, or directly with the fund house. As long as you have a bank account, you can invest in SIPs. It is also possible to make partial monthly contributions rather than total contributions if required. The only risk you will take is that your money will grow slower if you stop investing before maturity. However, this risk is low since most SIP schemes have 3 years or more lock-in periods. Also Read - PPF Vs. Mutual Fund SIP: Which Investment Instrument Gives You Better Returns Myth 3: SIPs are meant only for beginners The truth is that SIPs can be used by anyone who wants to invest in stocks and not just by beginners. This myth is that SIPs are very simple compared to other investment options like fixed deposits or mutual funds. And since they require little effort and maintenance, people assume that they're meant only for those who don't know much about investing. But the fact is that even experts use SIPs whenever they want to invest in stocks because it's the most convenient option available at present. Myth 4: You Can't Withdraw Early from a SIP Plan You can withdraw your investment in part or in full, but you must consider the following points before doing so:
● If you decide to withdraw from your Systematic Investment Plan (SIP), ensure that you have closed all your SIPs. If your SIP is still on, give your broker a special mandate to close it. ● The first units purchased are the first ones to be sold. This is called the mutual funds industry's First In, First Out (FIFO) rule. ● You cannot withdraw units before a year has passed, or else you will have to pay a short-term capital gains tax of 15%, excluding surcharge and cess. Some companies also charge an exit load on such units. ● Ensure that the lock-in period of the fund you invest in has expired. For instance, ELSS funds have a lock-in period of three years before which you cannot withdraw your money. Myth 5: SIP is for Long-Term Investors SIP is for only those who want to invest for the long term. This is one of the biggest myths about SIPs. You can use a SIP to save for short-term goals as well. For example, if you want to buy a new car next year or pay your daughter's college fees, you can start a SIP as soon as possible and make regular investments with your savings every month. With time, it will add up and help you achieve your goal faster than if you had invested in lump sums at different times. Best mutual funds recommendation for SIP Here are some of the benefits of SIP investments:
Diversification: SIPs offer diversification across stocks, sectors, industries, and even countries. This helps reduce risk while also helping you achieve better returns on your investments. Regular Savings: You don't need to worry about saving large amounts at once now and then when you start a SIP account because you will be making small monthly investments instead. This will ensure that you don't miss out on any opportunities, thereby improving your overall returns on investments over time. Tax Benefits: The government offers tax benefits under Section 80C of the Income Tax Act when you invest through instruments like mutual funds (MF) or ELSS (Equity Linked Savings Scheme). Conclusion Investing in a SIP is more than just buying and holding. It's about investing in the right fund and doing so consistently. We have covered some myths about SIPs and how they can help you save money in the long run. While investing in a SIP is a good idea, you need to remember that it's not an investment option suitable for everyone. If you can't afford to invest regularly, then opting for a lump sum investment might be better. To get a detailed insight into mutual funds schemes, try Swastika Investmart. Open Demat account with Swastika and enjoy seamless stock trading services hassle-free. Contact us to learn more. Call us - 0120 4400700 Mail us - hello@swastika.co.in
