A month before your car insurance policy comes to an end, you usually get a reminder to renew your policy from your agent.
As you know, renewing third-party insurance is mandatory, according to the Motor Vehicle Act of 1988, but most of you would also look at add-on covers or own damage to vehicle policy to protect your car in case of an untoward incident.
1. Look at the type of policy you want for your car
You can opt for your damage to your vehicle that helps you stay covered against damage caused to your vehicle due to accidents like fire, theft, etc.
In case of an accident, your damage cover compensates you for the expense to repair or replace parts of your damaged vehicle.
You can also look at add-on covers which include depreciation cover, passenger assist, consumable cover, engine safe cover, GAP value cover, key loss cover, and roadside assistance cover.
2. Read policy wordings
Policy wordings are different for different car insurance policies. So, the cover you have for the damage to your vehicle will be different from an add-on insurance cover.
Choose the type of policy you want for your vehicle and read the policy wordings carefully before you buy it.
3. Renew your policy on time
Many policyholders tend to not renew their existing policy and they lapse. According to the new IRDAI rules, if premiums aren’t paid on time, policyholders stand chance to lose no claim bonus (NCB) that they accumulated when the policy was in force.
To sum it up, while third-party car insurance is mandatorily needed to be renewed annually, you also need to constantly check on the policies you have purchased for your vehicle to ensure you don’t struggle in case of damage.
4. Use our customer support
We are here to help you and if you have any queries about your policy, so just contact us.
Our objective is to make the motor claims and renewal process as efficient and hassle-free as possible for the policyholder.
Disclaimer: For more details on risk factors, terms & conditions please read the sales brochure carefully before concluding a sale. The discount amount will vary subject to vehicle specification and place of registration.
Got a term plan for your family? Or maybe you’re planning to take the term plan in a few days.
If you are, good for you! One of the biggest questions, every person considering term insurance has, is – “Should I take the cover for the maximum period?”.
We provides coverage up to 85 years of age. or 20 25 30 35 40 years. I am confused about which policy term is better to get maximum benefits?
Just like him, hundreds of investors have asked me this question over and over again, and I tell them, “Just take it only until you reach 60 years of age.”
And they happily ignore my suggestion; as if I am crazy, suggesting this to them. The “Insurance only till 60 years” looks kooky to them – kind of a “wrong deal” and they want to get “maximum benefit” out of the term plan.
“The chances of my family receiving the claim amount is higher when I am covered for long” is the common thought process of every person who is in the mad rush of buying the highest possible tenure.
Trust me, that’s flawed thinking and I will explain why today. More than a sermon, think of this article as a discussion, where I put some points in front of you and you reflect and ask yourself – “Does it make sense? or not?” and then make your own decision. So here are those 5 reasons– why you should not take Insurance till the age of 85 years or more
1. You don’t need it beyond your working life
You need to ask yourself the question – “Why am I taking Life Insurance?” and the answer is – “Because right now, I don’t have enough net worth, which will help my family if I am gone” or in other words – “Because my family is financially dependent on me.”
For a person who is not earning and does not bring money home, his death will cause family only emotional loss; not financial loss. Hence, logically you need to cover yourself through a life insurance product, only for the time you are working and others are financially dependent on you.
2. You will have “probably” have enough wealth by the time you retire anyway
Stretching the 1st point, if you are taking life insurance cover until you are 75-85 years, will you need it at that time? Do you feel that you will have any reason to have a cover of 1 crore that time (after 30-40 years)? I am sure (more confident than you), that you would have completed all your financial goals by that time, you will have your own home by that time and you will have done everything in your life by that time.
Your focus area at that old age will be very different than what you focus on right now.
To understand this point, you have to stop for a moment and go into 2040-50; when you are retired and close to heaven’s door.
Are your children financially dependent on your income – which does not exist? Is your spouse depend on your income? You must have already accumulated enough wealth by that time and you must be getting some income out of that.
Your death has nothing to do with family cash flows at the time.
3. The premium factors in your tenure already
Most of the people who feel that they are smart enough to take a term plan till 85 years, forget that on the other side is a professional business running for decades now.
They have hired people who are 10 times smarter, who design products (they are called Actuaries) that generate large profits for companies and not investors. Life Insurance is a “for-profit” business. They design things so that they earn profit.
If a company allows you to make a plan that lasts until you turn 85, why have they done that? Why did they allow that to happen? The premiums they charge already factor in everything. You pay premiums to get that term plan, it does not come free!
4. The value of your sum assured is peanuts later
I hear it most of the time – “I am taking the term plan till 85 years so that even if I die, my family will get the money. So, the higher the tenure, the higher the chances of making money.”
But they forget that by doing so, they are helping the insurance guys make a profit, but let’s say you die at 70 years. Celebrations! Your family will get that 1 crore, which at this moment sounds good, but will not be worth a lot that time.
Let me show you the mirror that lets you look into the future
Let’s say you are a 30-year-old guy, and your monthly expenses are 40k per month. You say to yourself, “Let me take that term plan worth 1 crore so that in case, I die my family can get 1 crore which will provide them some good monthly income.”
It would be a very good number if you die early in your life! With each passing year that 1 crore will be worthless. If you die the next year of taking the term plan, the worth of that 1 crore is pretty much the same, 1 crore.
But if you die after 10 yrs, that 1 crore will be worth 50 lacs in today’s world. So, getting 1 crore after 10 yrs is the same as getting 50 lacs right now. Are you getting my point? The money you get in the term plan is a constant number, not linked to inflation!
So, imagine you have taken the term plan till 85 years and you die at 70 (after 40 yrs of taking the term plan),
what is the worth of that same 1 crore at that time? Hold your breath! It’ll not more than 6-7 lacs assuming an inflation of 7% and even if inflation for the next 40 yrs is a small 5%, it would not be worth 15 lacs today! So, when your family gets that 1 crore after 40 yrs, it’s kind of worthless.
No one would be depending on that money anyway; it’s just a bonus on your children’s inheritance money!
Act like a real informed and smart investor
I have been seeing this madness for many months now and was constantly wondering why people are focusing so much on this small thing called “long tenure” in the term plan.
I see investors abandoning one insurance company for another just because the other company is offering a term plan for 75 years.
You are allowing yourself to fall into a trap if you do this. If you have already taken the term plan for 85 years, do not worry … do not cancel it, just let it run its course.
Stop paying premiums when you feel that your family can be taken care of, by the wealth you have generated.
If you are planning to take a term plan right now, take it for as long as it takes you to retire, probably till 55 to 60 years, but not beyond that.
Would be happy to hear your thoughts and your views on this topic! You have taken the term plan for very high tenure.
The recent selloff in the most popular cryptocurrency -the Bitcoin, is a wake-up call for those investors smitten by astronomical returns provided by this unofficial unit.
The thrashing received so far highlights the importance of sovereign currencies and the need to understand the risk associated with cryptocurrency.
Although, it is desirable to expect volatility in a speculative risk asset, taking an informed decision based on the degree of uncertainty overrides the benefits on offer.
Uncertainty over its value shortly amid such high volatility limits the need for bitcoins and other cryptocurrencies as a medium of exchange.
Bitcoin, the largest cryptocurrency by market value, on Wednesday had plunged 30 percent to hit the $30,000 level, weighed down by China’s regulations on crypto trades and Tesla’s decision to suspend vehicle purchases using Bitcoins.
In the last 24 hours, Bitcoin touched an intraday high of nearly $40,000 and a low of $30,000. Bitcoin is still over 200 percent up from September 2020 and 27 percent so far this year.
This shows the huge amount of volatility that persists in the crypto market as against the traditional currency market.
“A nearly 40 percent dip in bitcoin price from its all-time high looks dramatic but is normal in many volatile markets, including crypto, especially after such a large rally,” said Avinash Shekhar, co-CEO of ZebPay.
Such corrections are mainly due to short-term traders taking profits, while long-term value investors might call these lower prices a buying opportunity.
“Technical analysts would call this a test of the support level around $40,000. Neither type of investor would say that tweets are the underlying cause. Investors should invest in education first.
Research the underlying value of Bitcoin, Ethereum, and other crypto-assets as you might look at a company’s information before buying stocks.
Use strategies like rupee cost averaging and SIPs to more confidently maneuver through volatility and take a long-term view,” Shekhar added.
Nithin Kamath, founder, and CEO at Zerodha said he has no exposure to cryptocurrencies, “But the rules for investing are the same: Reduce percentage exposure if the risk is high, and do not average down.”
According to Sumit Gupta, founder and CEO—CoinDCX, investments in cryptocurrencies too should be driven by financial situation and goals.
For those looking to diversify and grow their portfolio, Gupta believes that a long-term approach is warranted to benefit from the potential rewards of blockchain technology and its positive impact on cryptocurrency prices.
On the other hand, for immediate goals, he thinks that adopting a short-term approach with a clear risk-reward ratio is beneficial with quicker potential returns.
“Wisdom would point towards thorough research, entry near support levels for the said cryptocurrency and ensure to periodically review holdings while maintaining a strict stop loss based on risk appetite,” Gupta added.
In India, gold has traditionally been used as an instrument of saving along with its use in jewelry for marriages and festive occasions.
Over the last few decades, gold coins and bricks are being used as a saving medium. In general most of the gold that is imported into the country was rarely put to use regularly.
To take advantage of this habit, the government came out with a novel scheme that would incentivize gold saving as well as prevent the import of gold.
The government decided to launch a Sovereign Gold Bond scheme where instead of purchasing gold in physical form one can do so in electronic form, just like shares.
Date of Issue
The date of issuances shall be as per the details given in the calendar below:
Tranche Date of Subscription Date of Issuance
2021-22 Series VII October 25 – 29, 2021 November 02, 2021
2021-22 Series VIII November 29- December 03, 2021 December 07, 2021
2021-22 Series IX January 10-14, 2022 January 18, 2022
2021-22 Series X February 28- March 04, 2022 March 08, 2022
What is the Gold Bond Scheme?
Sovereign Gold Bonds, hereafter referred to as SGB, are government securities denominated in grams of gold. The Bond is issued by the Reserve Bank of India on behalf of the Government of India.
Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. These bonds act as a proxy for holding physical gold.
Why are SGB called Bonds?
SGB’s are just like any other bonds as the bearer of the the instrument is entitled to interest payment.
The Bonds bear interest at the rate of 2.50 percent per annum on the amount of initial investment.
This interest will be credited semi-annually to the investor’s bank account and the last final interest will be payable on maturity along with the principal. The tenure of each SGB is for eight years.
At what price are the SGBs sold?
The nominal value of SGB will be fixed based on a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewelers Association Ltd, for the last 3 business days of the week preceding the subscription period.
The price of gold for the relevant tranche will be published on the RBI website two days before the issue opens.
What are the advantages of SGB over physical gold?
The risks and costs of storage are eliminated.
The SGB offers a superior alternative to holding gold in physical form.
The bonds are held in the RBI or Demat form books, eliminating the risk of loss of scrip, etc.
SGB is free from issues like making charges and purity in the case of gold in jewelry form.
These bonds carry a sovereign guarantee since they are issued by the government.
The SGB can be used as collateral.
The buyer gets paid interest on the money invested, which is not possible when holding physical gold.
Who all are eligible to invest in SGB?
A resident Indian as defined under the Foreign Exchange Management Act (FEMA), 1999 is eligible to invest in SGB.
The set of eligible investors include individuals, HUFs, Trusts, Universities, and charitable institutions.
Joint holding and minors are also eligible to invest in SGB. If an individual investor changes his residential status from resident Indian to non-resident he may continue to hold SGB till early redemption/maturity.
What are the tax implications of investing in SGBs on both – interest and capital gains?
Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961.
The capital gains tax arising on redemption of SGB to an individual has been exempted.
The indexation benefits will be provided to long terms capital gains arising to any person on transfer of SGB.
Is there a minimum and maximum limit of investment for SGB?
Yes, the SGB is issued in denominations of one gram of gold and multiples thereof.
The minimum investment in the Bond shall be one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF), and 20 kg for trusts and similar entities notified by the government.
Each member of the family can buy 4 kg of SGB in her or her name. In the case of joint holding, the limit applies to the first applicant.
Is premature redemption allowed?
While the tenor of the bond is 8 years, early redemption or encashment is allowed after the fifth year from the date of issue on coupon payment dates.
The proceeds will be credited to the customer’s bank account provided at the time of applying for the SGB. The SGB investor also has the option of selling the bonds prematurely anytime on stock exchanges.
Such sales would attract capital gains tax at the same rate as for physical gold.
Everyone wants their money to grow to accomplish their financial goals but the risk of losing the hard-earned money has confined people in a “let it be” zone. Money won’t grow sitting idle in your account.
Don’t worry, there is a way to invest your money with low risk and high returns. Confused? It is none other than a Systematic Investment Plan (SIP) in mutual funds.
As a beginner, you need to invest your money in a scheme with low risk and high returns. And SIP in Mutual Funds is the one that can provide you with such comfort.
What is a Systematic Investment Plan (SIP)?
It is a method of investing in mutual funds. A particular amount of money (minimum Rs. 500) is invested every month to mutual funds for the period you want to invest. It involves very low risk and due to this reason, in little time, it has become the top preference of newbie investors.
Reasons to invest through SIP:
Diversified Investments- Investing through SIP in mutual funds offers you an advantage to invest in different assets. It reduces the risk and gives you higher returns. As a newbie, you don’t want to lose money in the first go.
Therefore, Investing in SIP does not only give you risk-free returns but also provides a diversified portfolio.
Compounding Effect:
SIP in mutual funds is much more profitable due to the compounding effect. Compounding effect means the returns on reinvestment. The returns you get from your investment, those returns are reinvested and this way, you get returns more than you estimated.
Rupee Cost Averaging:
This factor plays a big role in fetching maximum returns. Due to fixed regular investment, it averages the amount of one unit.
When the market goes up, you buy less; when the market goes down, you buy more. It is also one of the things intelligent investors do and Guess what? You don’t even have to engage with daily market updates. It all happens itself.
Conclusion:
Risk follows investment; they said. Lower risk can give you higher returns; they never said.
Investing in SIP is easy. You don’t need to take daily market updates to invest. Start your SIP once and enjoy stress-free high returns.
One cannot predict when monetary crises may arise and it is advised to invest in different types of financial portfolios. There are numerous avenues from where one can raise capital and its selection has to be based on need and urgency.
Here is an option to avail quick loan that requires less processing time and offers faster dispersal of capital.
In a scenario, where the requirement is of small capital and on an immediate basis, one can avail quick loans against shares, debentures, and bonds.
A number of banks and NBFCs grant advances against the security of shares, debentures, or bonds to individuals subject to the fulfillment of prescribed conditions.
Loans against shares and debentures can be given to individuals:
For meeting contingencies and needs of personal nature.
For subscribing to rights or new issue of shares/debentures against the security of existing shares/debentures.
Loan Amount Offered:
The loan amount against the security of shares, debentures, and bonds does not exceed the limit of Rs 10 lakh per individual if the securities are held in physical form.
However, an individual can avail of a loan of up to Rs 20 lakh if the securities are held in dematerialized/ Demat form.
For subscribing to IPOs, loans given to individuals do not exceed Rs 10 lakh.
Banks may extend finance to employees for purchasing shares of their own companies under ESOP to the extent of 90% of the purchase price of the shares or Rs 20 lakh, whichever is lower.
Bank’s Loan Policy:
Banks maintain a minimum margin of 50% of the market value of equity shares/ convertible debentures held in physical form. In the case of shares/ convertible debentures held in dematerialized form, a minimum margin of 25% is maintained.
The aforementioned are minimum margin stipulations and there is a possibility that banks may stipulate higher margins for shares whether held in physical form or dematerialized form.
In addition, the margin requirements for advances against preference shares / non-convertible debentures and bonds are determined by the banks themselves.
As per RBI guidelines, each bank formulates the approval of their Board of Directors regarding Loan Policy for grant of advances to individuals against shares/debentures/bonds.
Banks obtain a declaration from the borrower indicating the extent of loans availed of by him/her from other banks as input for credit evaluation.
Banks avail the facility of Pledge of the dematerialized
shares/debentures in the depository system, whereby the securities pledged by the borrower get blocked in favor of the lending bank.
The loan limit depends on the valuation of the security, applicable margin, and ability to service and repay the loan.
A loan is normally given in the form of an overdraft facility against the pledge of the securities. Interest has to be paid for the amount and period for which the overdraft facility is utilized.
Furthermore, a declaration is obtained from the borrower indicating the details of the loans/advances availed against shares and other securities, from any other bank, in order to ensure compliance with the ceilings prescribed for the purpose.
Advantages Of Loan Against Securities:
Ideal for short-term funding.
Enables instant liquidity against shares without selling them.
Takes care of all investment as well as personal needs.
The tenure of the loan against security is one year, but it can be easily renewed.
The rate of interest ranges from 12 – 15%. The rate varies from bank to bank.
The processing fee is charged at ~2% of the loan amount.
The loan amount depends on the security the borrower is offering.
The no charges for prepayment of the loan.
The loan has to be repaid within the fixed period. If the borrower fails to make the payment, the lender can file a case for recovery and the balance amount has to be repaid within 3 years from the date of sanction of the loan.
Who Cannot Avail It?
To Trusts and Endowments against the security of shares and debentures.
For speculative purposes, inter-corporate investments and acquiring a controlling interest in companies.
Against the equity shares of the banking company to its directors.
Banks will not extend advances to their employees/ Employee Trusts set up by them for the purpose of purchasing the banks’ own shares under ESOP/ IPO or from the secondary market.
This prohibition will apply irrespective of whether the advances are unsecured or secured.
Insurance has garnered a significant amount of attention in recent times. Especially among the younger generation, who has understood its importance and are looking forward to purchasing.
As a financial instrument, insurance can play a vital role in the life of a person and his family. However, you must choose the right one.
There are many insurance products in the market, life insurance, and medical insurance being among the most preferred options.
If you are the only earning person in the family, you need a product that offers better protection and cover in comparison to other insurance policies. Perhaps, you can consider a term plan.
1. Low premiums: When people hear about an insurance policy that offers a wide spectrum of coverage to the policyholder, they picture a high amount in their minds.
Term insurance, on the quite contrary, is believed to have the lowest premium among all other policies in the market.
Since the premium for term insurance policies is determined by factors like policyholder’s age, habits, and medical history, for some applicants the premium can be as low as INR 500 per month.
For people who look forward to investing a very small amount of their monthly income for insurance, term insurance can be an ideal option.
2. Plan Choice: Term insurance policies come with a lot of options. From picking a term insurance policy with single life cover for a sole earner to covering your spouse in a joint life policy, the options are endless.
Based on your needs and plans, you can choose the ideal product for yourself and your loved ones. Consider all the factors before buying a term insurance policy.
3. Tax Benefit: Tax savings entice consumers towards term insurance. Tax savings featured under section 80C of the Income Tax Act, 1961, allow the policyholder to exempt from tax on premiums paid and the sum assured.
4. Flexibility in Paying Premiums: There’s a myth wherein people believe that term insurances are only available for a maximum of 25 years.
However, it isn’t true, as term insurance plans with extended duration, are available as well. Experts suggest such plans, as they cover for a long term, and the premium is locked, thereby preventing it from getting affected by the market conditions.
5. Premium Flexibility: There are many factors involved when it comes to premium options. Earning, tenancy, disbursals, and mortality are a few of the many factors which must be considered when deciding to increase or decrease the premium amount.
However, the premium amount level is pre-specified and thus a policyholder cannot exceed the amount.
As we said at the start, most people think insurance is an unnecessary expense. The reason is that we feel confident about our future and our ability to tackle unseen circumstances.
But there is a huge difference between our perceived ability and reality. For instance, a few years of savings can vanish in case of a medical emergency.
1. Insurance ensures the family’s financial stability
No matter how much you have managed to save or what your monthly income is, an unexpected event can burn a huge hole in your pocket or can simply jeopardize your family’s financial future.
For example, if you do not have adequate life insurance, your family might have to go through financial hardship if you were to meet with an untimely death.
Though no amount of money can replace the loss of loved ones, having life insurance would save them from going through financial hardship.
Meanwhile, if you or your family do not have enough health insurance, then huge medical bills during any treatment can completely shake your finances.
So you must cover yourself, your family with an adequate amount of insurance.
2. Insurance brings peace of mind
The premium you pay to the insurance company is the price that guarantees that the insurance company will cover the damage in case of an unforeseen event.
And, that guarantee that your risk is covered brings peace of mind.
For example, let’s suppose you die an untimely death at a time when you still have several milestones to achieve like children’s education, their marriage, a retirement corpus for your spouse, etc.
Also, there is debt as a housing loan. Your untimely demise can put your family in a hand-to-mouth situation.
But, if you would have bought term insurance considering all these factors, your family would be able to sail through the hard times.
3. Insurance reduces stress during difficult times
No matter how hard you try to make your life better, an unforeseen event can completely turn things upside down, leaving you physically, emotionally, and financially strained.
Having adequate insurance helps in the sense that at least you don’t have to think about money during such a hard time, and can focus on recovery.
For example, suppose you or someone in your family had a heart attack and needs immediate hospitalization. Such treatments at good hospitals can cost lakhs.
So having health insurance in this case, saves you the worries and stress of arranging money.
With insurance in place, any financial stress will be taken care of, and you can focus on your recovery.
Conclusion:
Having insurance – life, health, and liability – is an essential part of financial planning. It can save you from financial hardship in case of any unforeseen circumstances.
However, the decision to buy insurance should be determined by three factors – requirement, the benefits you get from the policy, and your ability to pay the premium.
Many investors think of SIPs and mutual fund schemes as synonyms, however, that is not the case.
SIPs are merely tools that allow you to invest in a mutual fund scheme over some time.
It can be monthly, quarterly, or semi-annually depending on your financial goals.
It acts as a convenient option for salaried individuals to regularly invest in mutual funds.
The money can get deducted from their account automatically thereby engraining a financial discipline.
How to Start SIP Investment?
You can start a SIP with a minimum amount of Rs. 500. Here is how to start a SIP
investment if you wish to buy mutual funds.
• Basic Information The first step of SIP investment requires you to provide all your basic personal information in an online form such as your name, date of birth, address, mobile number, etc.
• Aadhar Based eKYC The above procedure for SIP investment can be simplified if you have an Aadhar card. You have to enter your Aadhar number and authenticate it with a One-Time Password (OTP).
This will pre-populate the online form with all your basic information details available in the UIDAI database.
IPV through a video call is not required if you complete the eKYC procedure through Aadhar as the UIDAI database already has your biometric information.
However, there is a statutory limit that will not allow you to invest more than Rs. 50,000 per fund house in a financial year if PAN card details are not submitted by you.
You can submit your PAN card and enhance this limit.
• Upload Documents In the next step, you are required to upload a scanned copy of your PAN card and address proof.
Benefits of Increasing Your SIP Investment Every Year
Here are some advantages of increasing your SIP every year.
• Counters Inflation While investing, the return adjusted for inflation is a significant factor to be considered.
As inflation increases every year, the amount you find substantial today may not have the same worth some years down the line.
Hence, if you do not increase your SIP investment amount every year, you ignore inflation which erodes the purchasing power of your hard-earned money.
• Builds A Bigger Corpus When your income and surplus increase every year, it makes sense to increase your SIP investment too.
It adds to the power of compounding and helps accumulate greater wealth by building a bigger corpus. Even a small 5% to 20% increase in the SIP investment plan at the end of 10, 15, or 20 years can make a big difference.
Also, you can avoid increased documentation as it will reduce the necessity of creating and tracking multiple stocks.
A systematic Investment Plan or SIP is a method of investing money in mutual funds. The other way to invest in a lump sum or one-time payment.
In SIP, you invest a fixed amount of money in a mutual fund of your choice every month.
The setup is such that the money is automatically debited from your bank account.
To know what amount of monthly SIP you need to invest to achieve a certain money goal, use our SIP calculator.
1. You Can Stop the SIP Anytime
There is no fine if you decide to stop a SIP plan. If you want to stop it, you simply have to opt-out of the SIP plan.
This has a very big advantage over recurring deposits (RD) which usually put a fine on you if you want to stop it.
After stopping your regular SIP investment, you can choose to get back the amount or let it continue to be invested in the mutual fund.
2. You Can Skip SIP Payment
If for some reason you don’t have enough balance in your account for the SIP investment of a certain month, you can continue with the SIP next month without any problems.
No fine or charges will be levied against you. In the case of RD, there will most likely be a fine for missing a payment.
3. You Can Invest Very Small Amounts
With SIP plans, you can start investing in mutual funds with an amount as little as ₹500 a month. Here are the best mutual funds to start a SIP investment with ₹500.
Even if your savings are not very large, you can still take advantage of the growth being experienced by India by investing in mutual funds!
4. You Benefit from the Effect of Compounding
When you invest using a SIP plan, your monthly SIP investment gives returns. Those returns are added to your actual investment amount and invested again!
So over time, your continuous monthly SIP and the returns earned by them are subjected to a compounding effect that ensures exponential growth.
5. You Can Start a New SIP If You Have More Money
If you start earning more or if you can save more, you can always start a new SIP plan in the same mutual fund or a different mutual fund.
That way, the extra money will also be invested for the future!
6. You Do Not Need to Worry About Timing the Market
You must have heard that you shouldn’t invest in an inflated market. When you invest using a SIP plan, you do not need to worry about timing your investment at all.
At times when the markets are high, your monthly SIP buys you a fewer number of units of a mutual fund. When the markets are low, the same monthly SIP amount buys you more units.
Therefore, in the long term, you do not pay very high prices for any unit of a mutual fund. This is called the rupee cost averaging.
7. You Become More Disciplined in Your Savings
It is a common complaint of many people that they aren’t able to save money. The truth is, the more you earn, the more you spend.
This is why you should save first and then spend. If you fix your date of SIP investment right after the date you receive your income, you invest before spending!
