Think Big, Invest Small with SIPs!

As a kid, you may probably have had a piggy bank where you saved a small amount of money received from your parents and relatives. The small amounts saved regularly over a period gave you a substantial amount and also inculcated the habit of saving since early childhood. Pretty much on the same lines is a SIP where you can systematically invest small amounts at regular intervals. The advantage with SIP is that your money does not sit idle as in the case of a piggy bank, but gets invested in the markets and has the scope of creating wealth over the years.

Creating a big corpus with SIP

Regularly investing even a small amount of Rs.500 starting today can help you achieve big goals. For example, let’s say your child is 1-year old and you want to set aside a sum for her higher education 20 years down the line. You can invest a specific amount monthly by using a mutual fund app in an SIP for the next 20 years by back-calculating using an expected or prevailing rate of return.

Investing more when funds are available

SIPs offer the flexibility to invest more when your income increases. While you continue to contribute to your regular SIPs, you can invest more when you get an annual bonus, increment, etc. You can gradually increase your SIP investment by 5% to 10% every year to work towards creating a bigger corpus.

Rupee cost averaging

SIPs are ideal for the long term or for specific goal-based investing. You can either invest towards a specific goal, as explained above, or you can invest for a substantially longer period, which evens out the impact of market extremes on your portfolio. Thus, when the market falls, you get the benefit of buying more units with the same SIP amount, and vice versa. This eliminates the need for timing the market and over time, you can reap the benefits of consistently investing and staying invested.

Diversification

When you invest in a mutual fund, the fund house invests across asset classes, sectors, or companies, depending on the fund category. Thus, even with a small amount you are exposed to varied investments and this does a balancing act, reducing your overall risk.

An SIP may seem like a tiny amount when seen in isolation. However, over the years, it can leverage the power of compounding and give you a chance to achieve a bigger corpus. Your monthly SIP may be small, but the thought of investing regularly is big enough to make it through your investment journey.

Think big while investing little by little. Karo Shuruat SIP se!

*For illustration purposes only. Past performance may or may not be sustained in the future. Returns are indicative.

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.