SIP in Mutual Fund is all weather strategy, but why? What makes it a foolproof strategy? Let’s understand.
Equity market does not move in straight lines. Of Course that makes it special. Because it is through this process it gives higher returns in the long run. But here comes the dilemma of a conservative investor. He/she cannot bear this sharp volatility. Also, timing the market becomes another big challenge for a beginner.
Answer to all these challenges is avoid timing the market and averaging the purchase. Every month a certain amount of money is invested, same time and same amount. Thus, the question of timing the market is elemented. Irrespective of the bullish or bearish market, units of the fund are being bought systematically.
Best part is, this process is on autopilot. Thus involving or chances of involving the judgement of the investor is not there. Investors rely on the judgement of the fund manager of the mutual fund for stock selection and asset allocation of the fund. He is relieved after allocating a certain fund every month.
Also, this helps in creating a bigger amount of corpus even if we do not have all investment amount upfront. Simply by saving every month and investing it in the market can create wonders over the years! Of course one needs to have a goal to sustain this long.
To know more about SIP in Mutual Fund & to invest you can call us on 9879956949 or email us on hardik@niveshplanner.com.