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How SIP in Mutual Fund can Boost your Portfolio?


Exercise is said to be an excellent source to maintain your physical health and wellbeing. However, one of the keyways to derive its benefits is to be regular. The same logic applies to investing in mutual funds. Here, a Systematic Investment Plan or SIP investment can be an effective option. 

SIP in mutual funds can help you be regular. This can be like an exercise for your finances to become healthy.

But is there an option to invest in mutual funds through lump-sum?

Here's how a SIP investment is different from a lump-sum:

Lump-Sum vs SIP Investment

  • Lump-sum

Some of us may think that it is better to accumulate a large amount of money first and then invest it in one go. You may also be tempted to time the market.. However, this might not work, as "the perfect time" to invest is a myth.

  • Systematic Investment Plan

When you opt for SIP in mutual funds, you zero in on a fixed amount to be invested at the frequency that suits you. Usually, investors opt for a monthly SIP, but it can be weekly, quarterly or even fortnightly.

Remember the fitness exercise example used earlier?

Well, just like how you would consult a fitness coach to set up a regular exercise routine. Similarly, in SIP, you can seek financial advice from a professional for setting up the right SIP amounts to invest in mutual funds that are appropriate for your goals.

You may also use the SIP Calculator, also known as a SIP mutual fund Calculator, to understand how your journey towards your goals will look like.

Advantages of SIP Investment:

  • Disciplined Investing

SIP can automatically instil the discipline of regular investing.

  • Hassle-free Investing

You need to set up SIP only once. It will then invest for you automatically and at regular intervals, thus eliminating the need for any intervention. This makes SIP an entirely hassle-free process.

  • Rupee Cost Averaging

Markets are known to be volatile. However, SIP will continue investing regular amounts even as the markets go up and down. Thus, a SIP Investment mitigates volatility as the rupee cost of buying is averaged out over highs and lows.

  • Flexibility

You can modify your SIP amount and add funds from time to time according to changes in your income and expenses, thus, accelerating your portfolio with time.

Going the SIP Way!

SIP investment involves a commitment to invest a fixed sum of money at regular intervals. Just like an exercise routine, investing relatively small sums regularly in a disciplined manner could be better in the long term than investments of rather large sums occasionally. Also, remember that you can start a SIP for investments from as low as ₹150!

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

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