Whether you are a seasoned investor or just starting up and making your way in the investment market scene, you would really be impressed with the benefits that a Systematic Investment Plan could give you. Also known as cost averaging theory, Systematic Investment Plan or SIP teaches you to have financial discipline and allows you to build wealth, one step at a time over a given period. You can start with US$40 per month and take advantage of compounding and cost averaging benefits. This approach helps you a lot particularly in hedging your investment against the inflation. What are some of the eye-popping benefits of SIP?
Disciplined Investing Method
When talking about investments, most people would always think about portfolio investments like putting your money in stock options and watching the market carefully to earn huge. While this may work for many, you must remember that you should have a working knowledge of the market, how it works, and also back yourself up with solid research as well as technical analysis and lots of free time. In some cases, investing in stock options can also be risky. In comparison, disciplined and regular investments like SIP allows you to stop worrying about the market, or when should you invest and how much. Needless to say, it erases the need to actively watch the market as SIP would do it for you.
An effective investment strategy, cost averaging disregards the need to time the market. What you just need to do is to invest a regular and pre-agreed upon amount over a period of time. Because the amount you invested is constant, you can purchase more units when the price dives and fewer ones when the price is at, or nearing, its peak, which may mean a lower average cost.
Simple and Easy To Monitor
You need not take time off from your regular routine to check out and make your investments. Along with a completed investment form, you can attach post-dated checks or arrange with your bank that your scheduled payments will be automatically debited from your accounts. This way, you have more time to relax and focus on your regular job. You will be able to keep track of your investment progress through a statement of accounts which is issued periodically.
You need to start investing at an early point in time and to maintain your investments regularly. This is one of the major keys to building wealth. Your US$40 can easily become US$400 or even US$4,000 when you invest your money regularly. For all you know, this can someday become US$40,000. Just think of the possibilities. By investing regularly, you will be surprised to find out later that such small sum has grown to large proportions.
Some people opt to join the investment market when they retire from their jobs. While they may have their own reasons for doing so, it is always better to start investing while you are young. Starting at a young age will benefit you more than just actual earnings on your investment. It will also help you foster an attitude of financial discipline and the value of savings. Moreover, starting young would help you grow your money even more.
With the present volatility of the stock market, investing your money smartly is the way to go. Learn more about Systematic Investment Plan as this may be your stable vehicle amidst a chaotic market. Don’t wait for everything to settle down. Start learning about SIPs now and begin investing at an early age. For all you know, you might just be slated to become the next millionaire by the time you are 50 or 60 years old.