Finance Frontier

Several investors begin their investment journey in mutual fund investments via the SIP (Systematic Investment Plan) mode of investment to enjoy the various benefits of SIP investments. It is a journey well begun, there’s no misgiving about that. However, a lot of these investors stop their investments after some time due to several reasons. Before we dive deeper into why one may stop their SIP investments, let’s quickly recall what an SIP is.

What is SIP?

SIP is a means to invest in mutual funds. Under the SIP mode of investment, an individual dedicates a predetermined amount of money in particular mutual fund schemes in a disciplined manner for a given period of time at fixed intervals. The periodicity of the intervals can be daily, weekly, monthly, or annually – whatever suits the investor. An investor can invest in SIP with an amount as little as Rs 100 every month.

Following are some of the reasons why investors might give a break to their SIP or even stop them:

1. Waiting for the bullish market to cool
   While investing in mutual funds, an uptrend in the market is identified as a blessing in disguise. With this mindset and several market critics constantly issuing warnings about a “market correction”, many investors assume that they need to pause their SIP investments. What’s more, these investors plan on resuming their SIP investments once the markets have finished “correcting”. This is an ideal instance of individuals attempting to time the market. However, investor tend to forget that as complex the markets might seem, they could go up even further.
2. The fear of losing in a bear market cycle
   The stock market observes regular ups and downs over a period. This is called market volatility and could scare away most investors. However, one should not forget that though this is true, but the markets do go up in the long run. Therefore, most equity mutual funds tend to perform well over time.
3. To buy a house
   Purchasing a house is generally a substantial personal major achievement for most Indian families. Individuals make several sacrifices in order to afford the house of their dreams. In this process, they often go beyond and above their budget. Before they know, a huge chunk of their salary is occupied by EMI payments. This may result in insufficiency of money to make investments. However, just as your house is inviolable, so is your retirement. If you think that you can delay your retirement and work efficiently into your 70s, you are just fooling yourself. Instead of stopping your SIP instalments, consider reducing the SIP amount and heightening it over time as your salary surges.

You can also use an SIP calculator to fathom the future value of your investments. So, what are you waiting for? Adopt the SIP way of investing and invest in mutual funds online today and be one step closer to your dreams. Happy investing!