The stock market is going through tough times. Yes, the stock markets are volatile. Investors are heading for the exit. Many investors are feeling this is the right time to exit SIPs. Systematic Investment Plan popularly called SIP, allows you to invest small sums of money regularly, say once each day, month or fortnight in a mutual fund. But, is this the right idea?
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Investing in mutual funds via SIPs, is just like investing in recurring deposits. You buy units of a mutual fund at a given date each month. What's the biggest benefit of SIPs? You (an investor) don't need to time the stock market. If you invest in mutual funds via SIPs, you stay invested in the stock market, during the highs and the lows.
You must continue your SIPs during volatile stock markets. In fact, volatile stock markets are good for investors, as SIPs help average out the cost.
With SIPs you can invest regularly and get more mutual fund units when the stock markets are down and less mutual fund units when the stock markets are up. This helps you average the purchase cost of your units.
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Blue-chip stocks are shares of large and well-reputed Companies, with a long history of very good financial performance. Through SIPs, you can invest small amounts of money, regularly in blue-chip stocks.
If you are doing Stock SIPs, may sure to invest in blue chip Companies. Blue-chip Companies have a good track record of consistent returns.
They are fundamentally stronger than small and mid-cap stocks. If you want to invest directly in the stock market, try stock SIPs.
SEE ALSO: Smart Tips To Pick Stocks
Retail investors (Ordinary investors like you and me), are dumping money in mutual funds. Many investors have left FDs, small saving schemes like PPF, NSC and even gold to invest in mutual funds. FD and small saving scheme rates have been falling in recent times, though FD rates may rise soon.
Investors who have invested in equity mutual funds via SIPs, have enjoyed double digit returns. Investors have invested in mutual funds via SIPs and bought units of mutual funds when NAVs were high. Now, it's time to buy units of mutual funds via SIPs, when NAVs are low.
Start investing in mutual funds via SIPs at a young age. With a long investment horizon, you enjoy high returns.
AMFI is promoting mutual funds through its highly successful programme, Mutual Funds Sahi Hai. You can invest in equity mutual funds via SIPs with just Rs 500 a month. Be Wise, Get Rich.
Mr C.S.Sudheer is a management graduate. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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