SIP first, spend later!

Instant gratification has become a way of life. It therefore seems bizarre if someone tells you to save for some vague time in the future before spending towards fulfilling your needs today. However, the ongoing pandemic and the exponential chaos that has ensued has underscored the importance of having sizable savings to fall back on.

No doubt, COVID-19 has affected nearly everyone at various levels; however, people with savings and smart investments have had a fatter cushion to protect themselves from the impact. Given the circumstances, you will definitely appreciate the value of planning your finances better. When you have a sound financial plan in place for the future, every rupee you saved automatically gets assigned a purpose.

But, when you have to begin from scratch, putting your finances together can seem overwhelming. Whether you’re saving for retirement or just to gain peace of mind, a good way to do begin would be through a Systematic Investment plan(SIP).

How does SIP help you make the right financial decisions?

SIPs aids in postponing spending

If you are an impulse buyer and struggle to maintain funds in your account by the end of the month, you can ensure that your SIPs are automatically deducted in the first week of every month or as soon as your salary hits your account. This will ascertain that you spend only what is left after fulfilling your investment obligations.

SIP helps in achieving your goals

SIP gives you the option of making goal-based investments. There are varied categories and sub-categories of mutual funds, which can be utilized towards fulfilling specific objectives. So instead of opting for a loan for future goals such as buying a house, you can plan in advance and invest towards these goals in small installments through SIPs today.

SIP makes saving & investing a habit

SIP allows you to invest in mutual funds through small amounts periodically over a pre-decided time period with the aim of building a large corpus in the long run. This means that your SIP will hit your bank account on your preferred date regularly, prioritizing investment over spending, which is otherwise difficult to do. It also excuses you from the hassle of timing the market.

SIP takes out the emotion from investing

A very underrated quality of SIP is that it removes the emotions from investing. Emotional decisions while investing is one of the most common reasons for sub-optimal returns. E.g., Investors tend to get tempted to buy more stocks when the markets are scaling record highs, while they tend to cease buying when markets are overrun by bears. This behavior is counter-productive to the ultimate aim of optimizing returns. So, when you are on a methodical investment plan, you invest through the highs and lows. Further, when you invest in a disciplined manner, you tend to get more units when the market is low and less units when the market is high, thus averaging the cost of mutual fund units.

Finally, while SIPs do involve you committing a certain amount regularly at the frequency you prefer, it does not mean they are inflexible. You can modify your SIP however you want.

Always remember–the future is uncertain, all you have is today. This is precisely why you should plan and invest today for the many tomorrows that may not go your way.

SIP first, spend later! Gain control on your finances on track with disciplined investing...karo Shuruat SIP se!

Disclaimer: This article represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

Past performance may or may not be sustained in the future.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.