Neha is in her thirties. She started her career as a business analyst about seven years ago. All the money she made over those years was spent on clothes, food and travel. Now that she wants to buy her own car, she has no more savings to pay the down payment. She now realizes that she needs to start investing to build up a body of work for her long-term goals.
She wants her money to grow quickly, but doesn’t have the patience to actively seek out financial products. Many working women, like Neha, complain about the lack of time to research and invest in different financial products as they have to manage their jobs and families. But the basic principle of a good investment is not in choosing the ideal product. It’s about making regular investments and repeating the right actions over time. Systematic Investment Plans (SIPs) can help you achieve this goal. Let us tell you how:
SIPs instill the discipline of savings
SIPs simplify the task of wealth creation because they are investments planned on autopilot. Once you have decided on the pattern in a mutual fund based on your goals, all you need to do is set up a direct debit from your bank account on the desired date each month. This way, you will allocate a fixed amount each month to your pattern of wealth building. This way, women who splurge on shopping and other activities will automatically reduce their urge and funnel their funds to SIPs.
SIPs make big dreams come true for small investments
SIPs are ideal for long-term goals like planning for retirement or securing your child’s future. If you start early and invest consistently at regular intervals, you can easily build up a large body of work to fund your goals. The best part about SIPs is that you can invest small amounts at regular intervals – something even housewives can put aside from their savings.
Take advantage of the power of dialing with SIP
Capitalization is an integral part of how mutual funds work. It helps generate exponential returns over time. So when you invest small amounts at regular intervals, the power of capitalization converts your investments into a decent body of work.
SIPs offer flexibility
It is not mandatory for investors to make monthly SIP payments to their mutual funds. While it is ideal not to skip or stop your SIPs, you can never foresee a financial contingency. SIPs, by their very nature, are flexible. So you can easily skip a month’s payment in the event of a financial emergency.
You can stop SIP at any time
There may be times when you feel that the financial burden of monthly SIPs is too much to bear. Or if the fund you’ve invested in is consistently underperforming. SIP investments allow investors to stop their monthly investments at any time. SIPs also do not have a lockout period. This gives women the opportunity to effectively manage their finances.
SIPs aren’t just limited to mutual funds
Women are generally a little wary of market volatility. They prefer to stick with traditional investments like fixed deposits or PPF, which offer fixed returns. You can also opt for SIP for such programs.
Now that you know how SIPs can help build wealth, instead of postponing investing entirely, start with SIPs and build your financial portfolio to meet your long term goals.
This is a partnership publication