Investments are excellent outlets that develop healthy financial behaviour. They allow you to build your wealth and generate inflation-beating returns. They are also helpful during a monetary crisis. Hence, it is essential to sustain the investing habit regularly. But people shy away from it for various reasons. The primary one is the complicated process that some investment options follow. In such cases, they should opt for a Systematic Investment Plan.
It is a systematic yet simplistic scheme. It lets the investor deposit small sums regularly for a fixed period. Here are other reasons why it serves as an ideal option for first-time investors:
- Deposit amount
There is a common misconception that to start investing, you need huge funds. But that is not true. An efficient SIP Investment lets you deposit as little as Rs. 100 at predetermined intervals. It even permits you to change the deposit amount if need be. However, the process is slightly lengthy. Hence, opt for a new SIP.
- Easy to follow through
SIPs follow a simplistic structure. It involves no additional, complicated steps. Plus, you get access to specific tools that guide you through your doubts. A prime example of this is the SIP Calculator. It is an online financial tool that calculates the returns you get on your SIP Investments.
- Tax-free
The best feature is that it is tax-free. Per section 80C of the Income Tax Act, it is exempt from any taxes. This allows your investments to grow and reach their maximum potential.
- No market expertise needed
Most investment channels require you to have adequate market knowledge. But that is not the case with SIP Plans. You need not time the market or worry about fluctuations. Through rupee cost averaging, you understand when your investment will do well.
- Forms financial discipline
SIPs are an excellent option to enter the investment world. It is the best way to discipline your financial habits gradually. For example, you have started earning recently. You want to start investing but want to start slow. In this case, you should opt for a SIP. It empowers you to develop the habit of investing regularly. Over time, it becomes second nature to you.
- Redeemable
SIPs allow you to redeem your invested funds quickly. Upon complying with a few procedural steps, the amount gets credited to your Savings Account in no time. This makes it a highly convenient and fuss-free option for those looking for short-term investments.
- Accessibility
Applying for SIPs has become relatively easy these days. Thanks to the Mutual Fund app and other online options, you can invest 24*7.