How to reap maximum benefits of SIP investment in India


If you are reading this article right now, you probably have a little idea about a Systematic Investment Plan and you are expecting an effective wealth generation out of it. Rest assured, as your income increases every month with this investment, you will likely have more money to invest further. Even a small increase to your SIP investment plan could hugely impact your investment portfolio and benefit you in the long term. When it comes to deriving benefits from your systematic investment plan, you ought to be patient. But some of us have the urge to make last-moment tax-saving investments, which is not a good strategy (unless you have a goal planner) and pushes people towards making the wrong decisions.


This blog will be discussing how existing as well as new SIP investors can enhance their benefits.


Starting a SIP with ELSS


Equity Linked Savings Scheme is a diversified equity mutual fund plan that gives you the dual purpose of saving tax and availing of the growth of equities in the long term. Unlike other instruments, ELSS has a lock-in period of only three years. A better way of investing in ELSS is through a SIP since it will help you take advantage of the ups and downs of markets through rupee cost averaging. Whenever the markets are down, you buy more units at that same price and when the market goes up, you buy lesser units. Over time, all of it averages out the cost per unit as compared to buying all the units at one go only. It is also one of the ways through which you can beat the increasing inflation in the long run by primary investment in equities.


Increase your investment with increasing income


With an increase in your income, your savings increases. Hence, it is recommended that you should also increase your SIP investments over time. This will not only enable you to achieve your goals faster but also help you accumulate a much larger corpus. This concept is also known as step-up or top-up SIP, allowing you to increase your instalments up by a fixed percentage or a fixed amount at certain intervals.


Be disciplined in the wake of volatility


Everybody knows that equity markets are volatile by default, and when volatility takes a toll on your emotional level pushes you to make hasty decisions, just stop for a moment and stick to your investment plan.


A lot of people cancel their plans fearing losses in the wake of a volatile market. Well, it is advised against taking such impulsive actions. In fact, here you get the best opportunity to invest systematically because the acquisition cost is reduced through cost averaging and the long term returns are enhanced appreciably.


Now that you have these tips at hand, having a Financial Goal Planner Calculator by your side is extremely important to assess the investment that you need to make in order to reap maximum benefits from a SIP.