SIPs or systematic investment plans of mutual funds are associated with several myths despite their growing popularity. It is imperative to bust such myths and clear your doubts concerning SIPs if you do not want to slow down your wealth creation..
Myth 1: Returns from SIPs Are Not Much.
FACT: SIPs are comparatively better wealth creation options that allow the accumulation of wealth in the long-term. But, they may be disappointing if one keeps a constant check on how it is fairing. The disciplined maintained with the SIP route may increase the base corpus besides facilitating solid market appreciation. Hence, the chances for returns to look good are high in the long-term. However, choosing the proper (customized) set of diversified portfolio of funds with a long-term goal helps yield returns. One has to remember that the power of compounding works both the ways. To gain more knowledge and to take well-informed investment decisions, approach ArthaYantra – world’s only full-service robo-advisory.
Myth 2: Markets May Or May Not Support SIPs
FACT: Mutual fund SIPs guard the investments from periods when markets are rough and wild. Thus, they save the investors from market swings. Besides saving from the futility of timing the market, the SIP investment mode helps accumulate more units of a security in a weak market, resulting in lower average purchase cost. Experts advise investors not to get their investment decisions affected because of the market fluctuations.
Myth 3: Penalty Should Be Paid To Exit SIPs
FACT: One need not pay any penalty to exit or stop an SIP. One can stop or continue SIP as per their wish. But the investor needs to provide a written request that is duly signed.
Myth 4: SIP Amount Cannot Be Changed Once Agreed
FACT: Even if you have decided to invest INR2,500 per month for a SIP, but wish to increase or decrease the amount later, you can do it without any problem. SIPs offer total flexibility for you to change your monthly investment amount. Moreover, no charges are associated with the change of SIP amount.
In conclusion, bust all the myths associated with SIPs and make well-informed decisions to get better returns. Happy financial journey!