What sets you apart from the rest is a disciplined attitude and when it comes to investments who better than the self-made billionaire Warren Buffet to endorse the idea. Once he famously said, “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” So why not straight get to it with Systematic Investment Plans (SIPs) that will make you a disciplined investor and a wealthy one too.
SIPs are offered by mutual funds that invest your hard earned money into the stock market instruments that are traded widely. One may argue that even fixed deposits can be considered as disciplined and safe investments when compared to equity. Sure, but wait until you see the following statistics. Equity investments have given investors 12 percent to 20 percent Compounded Annual Growth Returns (CAGR) on investments for periods of 5 to 20 years versus fixed deposits that have given returns in the range of 6 percent to 8 percent when invested for the same period.
While capital markets are susceptible to volatility on account of global or domestic events, you can pick and choose an SIP with the most diverse portfolio your fund house has to offer to hedge your risks and returns. Data suggests that ~93% of the portfolio’s performance is determined by asset allocation and not individual product performance. Asset allocation broadly represents investments in fixed income/debt, equities and gold. And, to further protect yourself and make most of the market volatility at the same time, it’s ideal to have multiple SIPs and there are multiple types of those for you to choose from. To list a few – Step-up, Alert, Flexi and Perpetual. Step-up SIPs allow investors to increase the SIP amount periodically. Alert SIPs send investors an alert to buy more when the markets crash. Flexi SIPs let investors change the SIP amount as they will and perpetual SIPs allow investors to not have an end date of the SIP and stop the SIP whenever you feel you have achieved your goal or market uncertainty is beyond your threshold.
Evidently, SIPs leave it to you to get started, to halt and to end investments. So stay focused and disciplined while finding a plan that syncs in with your life goals and there’s none better than Geojit’s Funds Genie to help you with that.
Posted: September 2018