The early bird does get the worm. The next one however, has to search for food.
When you look into our busy lives, many of us live with the misconception that ‘Since I don’t earn enough, I don’t really have much to invest! Plus, who’s in a hurry?’ This ‘so called’ belief leads to one thing that we don’t pay attention to. Taking action early on that is. Yes! We all have dreams that we hope to fulfill but the fact remains that whether it is about providing the best education for your child or leading a good retired life, we simply don’t do enough to realise these dreams.
Wouldn’t it be easier if someone guided you to make informed decisions? Here’s where Systematic Investment Planning (SIP) comes into the picture.
It’s an effective way to accumulate wealth in an organised manner through regular investments in mutual funds. Even if you aren’t raking in the moolah, it doesn’t really matter, because you can start your investment journey with something as low as Rs 500. That’s the price of two movie tickets on a weekend!
Don’t fret during a downturn or a market slump. An SIP works there too. It simply allows you to buy mutual fund units at a lower price and potentially earn higher returns when the market sees an upswing.
Most of us begin our investing journey with a lot of enthusiasm but get lost along the way. We fail to adhere to the monthly saving system and let our investments slowly dwindle which in turn, reduces the health of your corpus. Investing through an SIP, allows you to maintain your monthly investment pattern, which is easier than trying to collect a lump sum and investing it at the end of a certain period. Also, you can link it to how much money you have and increase your monthly investments as per your goals.
An old adage says, “You can't plow a field simply by turning it over in your mind.” This stands true for your investments also. From saving for your child’s education to keeping your eye on a trip you’ve planned, you can decide to invest in a short-term, medium or long-term goals. All you need to think about is how much do you need and when? However, be conscious of the mix you have chosen to invest in as it depends on your investment horizon. Equity funds are known to be a good tool for long-term investment, but if you are looking at something short-term then debt funds may suffice.
What if you got a head start in a race called life? Would it not make the run a bit easier? That’s exactly what you should do. Start as early as possible. Small amounts. Consistent efforts and focus on your end goal is the stuff winning stories are made of. The writing is clear on the wall. The sooner you begin investing, the better.
This is how SIPs may help you in your journey to financial freedom. They provide you with the much needed discipline and convenience to create a healthy corpus. Hence, they are like your Good EMI.
The author is National Sales Director, Franklin Templeton Investments India.