PensionBox Blogs
All you need to know about Systematic Investment Plan
Remy Sharp
Vanshika Agarwal
June 2, 2022

Millenials and GenZ who comprise the job market love it, when their salaries are credited into their bank accounts. Similarly, nearing month ends and the days of poverty could be used inter-exchangeably. Another fun habit about this generation is that they love to party. Every weekend and most of the weekends. This fun habit has the ability to give you every joy, make new friends and also drain you out of your riches.

We at PensionBox, believe in our millenials with utmost pride but also, we care for them. In this blog we will talk about a habit that will definitely keep you fulfilled in your golden days too. Yes, we’re talking about investing, in the same old SIP way. It does sound boring but this is a sure short way to cultivate a habit for saving money and a stepping stone towards managing your finances. Investing in mutual funds through a Systematic Investment Plan (SIP) can be a simple way to help you achieve your goals. So, let’s look into the meaning of SIP, how they work, and how they can benefit you. If you are someone seriously contemplating why you are not able to save up anything from your salary, this blog is your rescue.

What is SIP?

A Systematic Investment Plan (or SIP) is an investment strategy best suited for Mutual funds. As the term indicates, it is a systematic method of investing fixed amounts of money periodically. This can be monthly, quarterly or semi-annually etc. When we invest into a product periodically, it becomes easier to achieve your goal.

How to develop this habit of SIP?

You must fix a certain percentage of your salary or a fixed amount that you want to invest into an SIP. Then, you need to decide the frequency of these investments. And, finally find a Mutual fund that helps you meet your financial goal and match your risk appetite. Then, the final step is to set aside this decided amount of money towards Investments as soon as your salary is credited. This will develop a habit of saving and we urge you to follow this as soon as possible. You could also give a standing instruction to your bank to transfer the amount directly from your bank account into the mutual fund SIP of your choice, on a fixed date every month

Why SIP?

When you invest through a SIP, you invest a fixed sum of money periodically. This amount lets you purchase a certain number of fund units. If you continue to do this for a long time, you get to invest in the fund during the highs and the lows. Here, you don’t have to time the market. SIP investments remove this factor of unpredictability.

When does one start investing in an SIP ?

In simple words, the earlier the better. Staying invested for a longer horizon helps you to accumulate more wealth. Compounding occurs when returns you earn on your investments start earning returns as well. When you invest regularly through SIPs, your returns get reinvested. Over time, this results in a snowball-effect that may increase your potential returns. In today’s age and date, it can be impossible to save. Given the rising Inflation and the low salaries, we might find ourselves in the position of regret later for not having saved enough. Hence, we need to plan ahead. For all we know that Old age is a bittersweet space, we cannot be sure what could follow.

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