Why Investors Should Choose SIPs to Achieve Financial Goals?
I still remembered the story of a deaf monkey which my father told me when I was a child. It was a story of 3 monkeys who accidentally fall into a well while playing. Witnessing animals who were present there at that moment frequently rush to them but they didn’t find any means to take them out from the deep well. However, some bystanders started cheering them to jump out of the well but soon they realize that it is impossible for them to come out from there as it is very deep. Some witnesses even started shouting that they’ll be going to die. After hearing this whisper, 2 monkeys also lost their hope of escaping and sadly stand aside. But the third monkey continuously tries harder & harder until he jumps right out from the well. All the witnessing animals were eager to know how he managed to have such a strong willpower but it took no longer for them to realize that he is deaf.
The main purpose of presenting this motivational story before you is to make you aware of the fact that one should adopt this deaf monkey approach when he invests his hard earned money and savings in mutual fund schemes. Many times the market news and unfavorable market condition influence investor’s ideology due to which they suddenly stop investing. Every investor is advised to follow the deaf monkey strategy when they invest in a mutual fund through SIP or SWP to follow their long-term financial goal. They should ensure to stick to their financial objective and must tune out to mutual funds market news.
Systematic Investment Plan (SIP) for Financial Goals
Systematic Investment Plan (SIP) is a smart way to invest your savings in a disciplined manner. In SIP, investors just need to invest a requisite sum on monthly, quarterly or half yearly basis to reach their financial goal. SIP is a flexible way of investment in which there is no need for the investor to time the market by altering their investments as per changing marketing conditions & they only need a fixed amount on a prescribed time interval. In fact, investors can maximize their return by buying more units during the market fall with their available money.
You can utilize SIP in a strategic way to achieve the following financial goals:
Short Term Goals: Sip in debt fund is a good option for an investor planning for short-term goals. When you plan for short duration goals like buying a car, you can freely choose SIP in debt funds or liquid fund depending on your risk profile. Such low terms investment options minimize the impact of interest rate movement on the investor’s portfolio. Such funds are also applicable to other short terms goals like refurbishing house or planning annual holidays.
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Medium Term Goals:- When you plan for medium-term goals like child’s education or child marriage, you can go for hybrid funds as your investment option. These funds usually invest in a combination of debt and equity funds where equity portions deliver stability to the investor’s portfolio. Investors planning for such goals have an option to invest systematically either in balanced or aggressive hybrid funds as per their investment time duration and risk profile.
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Long Term Goals:- Long-term financial goals like retirement planning are always advised for an investor to start at early ages (ideally at 25 years) because investors don’t require immediate cash flows at such age. Investment in equity funds through systematic investment plan or SIP is a good approach to start investing for retirement which also protects one’s retirement corpus against inflation and unfavorable market risk. As an investor, you can choose SIPs in midcap, large or multi-cap funds for all types of long-term financial goals.
Investment in mutual fund through SIP is the best options to attain all types of financial goals whether it is a short-term, mid-term or long duration goal. For an investor, it is always recommended to have a consultation with an experienced financial advisor to get information and suggestion about different schemes regarding their desirable financial objective.
Mr. Ajay Kumar Jain, M.Sc, Chairman And Managing Director
Being the Chairman And Managing Director, he focuses on holistic investment planning and wealth management and tries to make investment planning simpler for retail and HNI investors. Investor education is one of the prime things that Mr. Ajay Jain focuses on as he believes financial education is the foundation of successful investing. With over two decades of experience, Mr. Jain has made a mark in the Indian mutual fund industry due to his compassion and sheer hard work.