SIP mutual funds are smart
choice, any day. It helps inculcate a financial discipline and helps you put
investments on your priority list. This particular investment plan gives you
the benefit of averaging out your cost of investment thereby reducing your
risk. For example, you invest Rs. 1000 every month and let us assume that the
scheme you invested in, is available at a unit value of Rs. 20 per unit. Then
in month 1, you will be able to obtain 50 units. In month 2, if the unit value
goes down to Rs. 10 then you will be able to obtain 100 units. Hence for Rs.
2000 invested over 2 months, the total value of your investment at the end of 2
months is Rs. 1500. However, if you had invested a straight sum of Rs. 2000 in
month 1 when the unit value was Rs. 20 per unit – your net value at the end of
month 2 would have been only be Rs. 1000. So, a SIP scheme helps you average
out your cost and thereby reduces risk resulting in generating better returns
and compounding your wealth.

SIP has given all
middle class a success formula, which is Start Early + Invest Regularly =
Create Wealth. Since systematic investing has a compounding effect on your
investments, in the long term, an investment as low as Rs 1000/- per month can
swell up into a huge corpus. Similarly, starting your investments early also
has its own advantages. Starting early means that the power of compounding
starts acting on your money earlier, thereby potentially generating better
returns. Now, as you decide to start with SIP, the purchase can be initiated on
any day of the month where the actual purchase date can be 1, 7, 10, 15, 20, 28
of every month. But it is always advised to go with the last dates of the month
because by then, you must have met out all your necessary expenses.

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