One Stop Website for all your Queries on Investment.

Blog    >   Why invest through Systematic Investment Plan

Investors generally tend to speculate on the right time to invest. They try to invest their money at a time when they believe that the prices have fallen to the lowest level. But I have not known anyone who have predicted with certainty whether the market is going to move – upwards, downwards or sideways in the short-term.

Greed and fear play an important role in investment decisions taken by investors. As a result, they tend to invest when the markets are moving up and calm down or sell when the markets are going down, which is exactly what they should not be doing.

The normal correct principal would be to invest at regular intervals through Systematic Investment Plan (SIP). This is where the benefit of Rupee Cost Averaging comes in.

With Rupee Cost Averaging, an investor invests a fixed amount at regular intervals irrespective of the market movements. As a result, you will be able to buy more units when the markets are low. And when the markets are high, you do not stop investments, you continue to invest in the market, but you will buy lesser units.

Apart from above, the other benefits that a Systematic Investment Plan offers are:

1. It allows an investor to invest regularly and in a disciplined manner;
2. It is very convenient for those who cannot afford to invest lumpsum amount; and
3. You do not need to know when to buy and at what price, as long as you are convinced about the indicative       long term returns on your investment.

Share Facebook googleplus

2 Responses to Why invest through Systematic Investment Plan

  1. Probal Kumar Ghosh says:
    December 8, 2015 at 1:47 pm

    Unfortunately most of us do not understand the concept of cost averaging & prefet for safe investment instruments.

    • ASHOK KAKKAD says:
      June 9, 2016 at 9:05 am

      sir with due respect

      if you do not know to ride a scooter, will you continue to ride cycle?

Leave a Reply

Your email address will not be published. Required fields are marked *