Stay financially healthy with SIP (Systematic Investment Plan)

In our previous blog we have learned the zest of what are SIP, SWP and STP. In our today’s topic we will learn about the role of SIP in our financial health.

Let us see why we need SIP but first and foremost lets get the brief idea what financial health and goals are

What are Financial Goals

For instance, we all have our future goal where we want to get something like a private flat and as the time pass so does our needs grow, and we would want to buy a more luxurious car and go holidaying in the foreign countries. This is like natural progression if we look at it there is a pattern here, our need increase as we start to earn more and all these needs are classified as our financial goal like retirement and child education.

How to achieve the Financial Goals

The problem with growing needs is that only saving won’t be of much help. So now the question arises how do  we achieve all our financial goals? And the answer to this is we need a plan and a systematic way to execute this plan.

Consider, SIP, a type of investment which actually helps us in achieving all our financial goals by investing regularly in Mutual Funds.

Now, Let us learn what actually an SIP is and how it helps to stay us Financially Healthy

As we know regular exercise is good for our health. When we exercise, we don’t get abs and tone body in a week or a month but slowly we start to see the benefits of regular exercise. We will first notice our body getting into shape and then eventually we start seeing those desired muscles and abs. This happens gradually over a period, when we exercise regularly.

Investing in SIP, works out for our financial health in the same way. We invest our money at regular intervals in SIP which finally grows to a large amount over the period.
Now most of us don’t have large lump sum to invest, but the good news is that we can start an SIP with smaller amount and increase gradually year over year and this is the 1^st benefit of SIP. There are other benefits too.

As we know the market has its ups and downs and timing the market is very difficult for most of us. But when we invest in SIP we don’t need to worry where the market is going because our regular investment in high and low market conditions averages out to a good return in the long run.
So if timing the market and market fluctuation were a worry, it shouldn’t be anymore.

SIP gets its strength from the power of compounding.

Compounding can help us grow small sum of money overtime into large sums enough to fulfill all the financial growth. It is another great benefit of SIP.

In other words an SIP is an investment installment, for instance similar to the installment for a home loan. Just like a home loan built our dream home at the end, SIP grows small sum of money to a larger amount which will help us fulfill our financial goals in the end. When invested regularly our money grows enough to turn any dream into reality, after all it’s our dream and it’s our responsibility to make it happen nobody else can.
Only a systematic approach like SIP will help us achieve our financial faster. With SIP, we all can gradually improve our financial health, since mutual funds investments, are like the stepping stones towards achieving our dreams.

For more details refer to HDFC Daily SIP form.

Note: Mutual fund investments are subject to market risks, so read all the scheme related documents to save yourself from the future hassle.