Systematic Investment Plan (SIP) is growing in popularity every month. A good percentage of mutual fund inflows is through SIPs. The public discussion on SIP is so much that some new investors are led to believe that SIP is a product, rather a mechanism.<\/p>\n
Along with this, there are strong arguments about why SIP is not suitable for investors.\u00a0 Both sides mention a lot of factors, but I find one crucial factor missing in this discussion – and that concerns our behaviour.<\/p>\n
The most important benefit of a SIP is that it stops you from being your own enemy. That is it!<\/p>\n
Let us assume that you have drawn up a good financial plan, and this calls for investing x rupees a month. If you implement this in a way that you have to make a specific action every month, there is a very good chance that you would not do it regularly. On the other hand, if you automate this by setting up a SIP,\u00a0 you make a decision initially and then get out of the way. Every month your investment gets made and you make that much progress towards your goals.<\/p>\n
A SIP does not reduce your investment risk. It does not reduce market risk. However it eliminates the behaviour risk.<\/p>\n
<\/p>\n
Related reading:\u00a0 Your mistaken belief in financial willpower<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Systematic Investment Plan (SIP) is growing in popularity every month. A good percentage of mutual fund inflows is through SIPs. The public discussion on SIP is so much that some new investors are led to believe that SIP is a Read More<\/a><\/p>\n","protected":false},"author":4,"featured_media":702,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_themeisle_gutenberg_block_has_review":false,"footnotes":""},"categories":[6],"tags":[18,17,19,16],"class_list":["post-119","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mf","tag-automation","tag-behaviour","tag-progress","tag-sip"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t