How Systematic Investment Planning can Help Meet Your Financial Goals

Mutual fund SIPs can let you retain complete control of your finances in terms of how much to invest and when. Here’s how systematic investment planning (SIP) can help you realise your cherished dreams and achieve financial goals:

1. Start small, reap big: Building a nest egg step by step takes time. With a systematic investment plan, you can start with as little as Rs 500 and can leverage the power of compounding to grow your investment on a cumulative return basis. You can even alter or modify the payments as required from time to time.{2D743194-97C2-43F9-BC28-AEC370801ECD}
2. Liquidity: Personal or family needs can change rapidly and without warning. Depending on the situation, you may need to redeem the accumulated value of your investment quickly. By planning your investments systematically, you can ensure that should the need arise, you can quickly liquidate some of them in the short term.
3. Save first, spend later: With a systematic investment plan, the impulse to spend first and save the remainder can be curbed for good. By setting up automated payments from your bank account, the amount of discipline required to save money consciously is much less. Mutual fund SIPs can be set up to transfer the desired amount, on a certain date each week/month, without any intervention required on your part.
4. Diversification: Depending on the type of fund chosen, the steady investments you make in SIPs are directed into a wide variety of asset classes including debt, gold and equity. This lets you spread risk over a number of different sectors and geographies, precluding the possibility of setbacks across the board.
5. Easy to manage: From setting up to daily tracking, SIPs are easy to manage. Once you have chosen the type of fund, the amount you schedule periodic, automatic debits from your bank account on a weekly, monthly or quarterly basis.
6. Rupee cost averaging: Rupee cost averaging lets you get more units of the mutual fund scheme for a given amount when the market falls. On the other hand, when the market rallies, your share of units falls proportionately. This averages the cost of investment and prevents the need for speculation.
7. Tax benefits: SIPs in Equity Linked Saving Scheme (ELSS) qualify for tax deduction under Section 80C of the Income Tax Act, 1961 . Also, if you have an investment horizon of 5 years or more, these mutual funds can also provide capital growth.

Your life goals can serve as goalposts when deciding to invest in SIPs. By investing in the long term, you can benefit from the compounding effect to grow small savings into a sizeable corpus.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.