Investment in Mutual Funds- SIP

Are Mutual funds Risky?

Do not let this sentence scare you. “Mutual fund investment are subject to market risk. Please read the offer documents carefully before investing”.
Most people avoid investing in mutual funds just because of this one warning. Yes, there is a market risk, but look at the history and growth of mutual funds.

Professionally Managed
It is very difficult for many individuals to manage their own money, Mutual Funds are managed by professional, who are skilled when it comes to making investment decisions based on robust research and expertise.

Best way to invest in Mutual Fund

Systematic Investment Plan
Many individual it is a very difficult to buy number of share of different companies when their monthly investment is very low, SIP is the best way to invest in Mutual Fund.
SIPs are like drops of water, the more collected, the larger the pool it creates. So, create your pool of wealth by starting your SIP in best mutual funds with as low as Rs.500/month

Also Read: Systematic Withdrawal Plan

Benefits of investing in Mutual Fund through SIP

Compounding is the 8th wonder
Do you know the 15 X 15 X 15 rule of mutual funds?

Well, it simply says, 15,000 rupees SIP per month for 15 years with 15% compounded annual returns, value will be 1 CRORE (against total saving of only 27 lakhs).

Now, read this one. The 15 X 15 X 30 rule of mutual funds? 15,000 Rupees SIP per month for 30 years (instead of 15 years as earlier) @ 15% compounded annual return, Value will be 10 crores (against 1 crore for 15 years).

Pv=Fv(1+r)^N.
N means time, it’s more powerful in compound interested magic of wealth creation. Discipline saving for long term.

Adjust market volatility
With rupee cost averaging you can adjust your units by pumping more money during market slag. This would give you superior returns.

Diversification

Mutual funds help you diversify your investments. There is always a risk if the market crashes and specially if you have invested in single securities. These problem can be avoid by investing in different asset classes and by portfolio diversification. If you were investing in stocks and had to diversify, you would have to select at least 10 stocks carefully from different sectors. This can be time consuming and lengthy process. For instance, if you invest in a mutual fund that tracks the NSE Nifty you would get access to as many as 50 stocks across sectors in a single fund. This will help you to reduce risk to a large extent

Apart from these there are lots of more benefits of investment in Mutual Funds like tax benefits, easy to buy and sell, transparency, liquidity, ease of monitoring, goal planning, wide range of funds etc.