Why SIPs are a must-have in an investment portfolio

Why SIPs are a must-have in an investment portfolio

Systematic Investment Plans (SIPs) are a sure-shot way of making money. The phased investment strategy is an ideal way to save for homebuilding, children's studies, marriages or retirement. An investor can plan SIPs from five years through 10, 15 or 20 years.

SIP offers a simple tool for the common man to ride the booming stock market at a low risk. There is nothing like an SIP to overcome market volatility. An investor does not have to be glued to the ups and downs of the market.

The money can be auto-debited through electronic transfer from the bank account. Few investment options rival the simplicity of SIP because an investor can hardly miss a payment date.

Still only 5 per cent of people invest in mutual funds. The rest of the population is still unaware of SIP or averse to it. Each of them can find a plan that suits their needs.

Everyone knows that bank deposits are perhaps the safest savings method. Insurance is still seen more as something to get tax exemption from and less of a coverage instrument. Mutual funds are considered as a last option because of low awareness.

SIP investments are on the rise. People have started buying into them, going by the data from the last three years.

(The writer is the CEO of Canara Robeco Asset Management)

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