Published: 29th Nov 2024
By: Value Research
What you think you know about SIP may be wrong
SIP is a popular way to invest in mutual funds, offering discipline and convenience. However, it comes with its share of misconceptions. Here we clear up the confusion to help you understand SIPs better.
Think SIPs are rigid? That's far from true. SIPs offer flexibility to change your investment amount, date, or even pause instalments. In fact, we recommend you increase your SIP amount when you get a raise.
Some believe weekly SIPs outperform monthly ones. But here's the truth: the difference in returns between weekly and monthly SIPs is minimal. So don't complicate your investment journey–stick to monthly SIPs for simplicity and almost identical results.
Not really. There is no penalty for missing 1-2 monthly SIP instalments. Your investment stays active. However, avoid missing three consecutive months, or your SIP might be cancelled. But you can always restart it by creating a fresh mandate.
SIPs don’t guarantee immunity from losses. When markets decline, the value of your investment might turn negative, especially in equity funds. However, SIP turns market volatility into your friend and averages out your cost of investment over time.
SIPs work great for all fund types! They are equally useful for non-equity funds. SIPs build financial discipline regardless of fund category. SIPs automate investment, making them a great tool for building wealth in the long run.
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