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SIP and Equity Markets – AxisDirect
AxisDirect-O-Nomics
Nov 20, 2017 | Source: Money Control
SIP through a Volatile Market
Wealth is created by investing diligently but investing in companies usually involves risks. High return is mostly a reward for taking a high risk from an investor’s angle; a reasonable option would be to invest in such companies through equities and by remaining invested in the long run. This probably gives investors proportional ownership in those companies. But the question that the investor asks is which company (or share) to buy?
That’s where investors may consider mutual funds. Fund manager are professionals who collect investors’ money and invest in equity shares of companies. They have a lot of experience in analyzing the companies, understanding their value, their long-term potential; and have the understanding of the risks involved while investing in such businesses. And in return, the fee they charge is within SEBI prescribed guideline which is usually one of the lowest. So from an investors’ viewpoint, unless he/she has ample time, stock picking skill and discretion about the economy, sectors and companies, it is feasible to invest in equities through mutual funds and see their investment in companies possibly grow over long term. It is understandable that many won’t have the necessary money at hand for investment. This is where Systematic Investment Plans (SIPs) come in. SIPs help investors to invest in equities via the mutual fund route with as little as Rs 500 per month. Through this process, even a small investor may help you create long-term wealth by remaining disciplined through markets highs and lows.
Features of SIP route:
• Easy Diversification: One of the basics of investing is to spread the investment corpus across different investments. Mutual funds offer an easy way to do this. Each mutual fund invests across a large number of companies
• Choice: There are multiple schemes of mutual funds available for every kind of investor based on their potential for taking risk level and time horizon.
• Convenience: One can easily invest as well as withdraw/redeem from mutual funds they have invested in. KYC Compliant investors can make investments by filling up the application form or even online with a direct debit from one’s bank account. Similarly, redemptions can be made directly to your bank account
• Rupee cost averaging: It averages the cost of investment – which means when the markets are down one gets more mutual fund units and when markets are up one gets potential returns
• Timing becomes irrelevant: The need to time the market will no longer be an issue, since frequent investments seek entry in the market at both high and low levels. Thus making it a feasible avenue for investment in volatile markets
India today possibly stands on the cusp of high growth trajectory.
Related Keyword
Mutual Funds
SIP
Lumpsum
India
Equity SIP
AxisDirect-O-Nomics
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