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SIPs - A habit to inculcate

Two subconscious habits that we could do without and one investment habit that we could do with


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Humans are creatures of habit. I'm no psychologist, but I can safely make the assumption that we derive comfort from our routines because we get habituated to them. More often than not, a habit allows us to predict and anticipate exactly what will happen, without throwing up any surprises. To cut a long story short, we like our habits because they make our life easier.

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Our conscious habits are those we deliberately undertake and are aware of, like making a to-do list for the day every morning or going for a run or focusing on only one task at a time. Multi-tasking is not a good habit to have, by the way, but that's another story. This story is about habits - conscious and subconscious. As far as subconscious ones are concerned, I think one of the most common ones is honking at traffic signals. Sitting behind the wheel somehow wires our brains into thinking that everyone else is going to park their car in the middle of the road and set up a picnic right then and there. Of course, that's never going to happen, but we can't help but honk incessantly whether we're genuinely in a hurry or not. And we do it out of habit, like many other things. The other subconscious habit that's common to most of us is the way we form a queue. When we're supposed to stand in a straight line, one behind the other, we somehow collectively end up crowding at the front. On the other hand, the one conscious habit that everyone needs to adopt is the habit of SIPs. Saving something every month and investing it systematically in mutual funds is a habit that most of us should inculcate. It's not that hard and the long-term benefits are fabulous.

Cultivating the SIP habit frees you from having to decide when and how much to invest. SIPs are in this sense the best way to invest in equity funds. Systematic investments average out the cost of your unit purchases, they don't put you at the risk of catching a market peak, and they earn you the benefit of compounding. And probably the most important benefit, from a non-technical perspective, is that SIPs force you to save and invest that definite amount periodically.

Money saved is money earned, we know that. And in the case of SIPs, money invested is money that works to earn more money for you. Now, isn't that a habit you could get used to?