Riding The Wave Of The Systematic Investment Plan

As the wise age-old saying goes, “a penny saved is a penny earned” and an SIP Investment is a viable investment facility that allows individuals the opportunity to save money, and as the name implies, to do so on a regular scheduled basis that encourages discipline in securing a sound financial future. Have a look at the following investment tips on this investment basic that can add value, structure, and ease to your future life goals.

An SIP (Systematic Investment Plan) investment makes investing in the stock market easy for individuals who are not familiar with the stock trading arena, or for those who want to minimize the risk of personal investment in the stock market.

The investment placed in a systematic investment plan investment goes to a Mutual Fund pool that is invested in the stock market by the financial experts entrusted with the funds. The smaller amount of monthly or quarterly payments by the individual enables them to invest in several stocks that are monitored over a period of time, thus spreading out the risk and increasing their chances for success and profitable returns. This option is more attractive than having to take the greater risk of laying out thousands of dollars for a one-off investment in stocks. In addition, the experts making the investment decisions will buy more units of stock when the price is low and fewer stock units when the price is high, an investment technique that is invaluable in the buying and selling of stock for a profit. What happens too in this type of investment is that market fluctuations in prices generally taper off and are averaged by the investment company, allowing the individual to pay a lower investment amount for the same or greater returns.

Another great feature of this financial empowerment investment plan is that the interest gained through investment in the Mutual Fund also accrues investment via the compounded interest method, giving the investor an additional incentive to save.

A systematic investment plan investment is ideal for persons who have a specific medium to long-term goal in mind. For instance, an individual might be planning the purchase of a house in five years, and this system of saving helps them squirrel away money in pre-determined amounts at regular intervals, enabling them to predict when they will reach their desired down payment on their dream home. This type of investment is also ideal for other short and long term financial commitments such as a child’s college education expenses, a car, a wedding, or toward amassing retirement funds that will take them through their silver years.

Making payments to a systematic investment plan is convenient and easy. The investor chooses an investment plan that runs from a minimum of six months and either submits postdated checks for the incremental investment amount to the investing company along with an enrollment form, or assigns a bank standing order payment plan so that payments are automatically withdrawn form their account when payment is due.

Other attractive benefits to a SIP Investment is that there are no entry or exit loads. Also, wherever it is applicable, all capital gains are taxed via a first in/first out method.