Saturday, 19 January 2019

What Makes SIPs And Child Investment Plan a Rewarding Combination?


The cost of getting a good education in India has increased significantly in the last few decades. And not just education, the impact of inflation is as such that even day-to-day expenses are flying through the roof with no relief in sight. This has made it very important for the parents to start thinking about the future of their child as early in life as possible.
Fortunately, there are now many investment options available to help parents start investing in their child's future. But among all the different options, SIPs or Systematic Investment Plans in mutual funds is known as one of the best. Let us have a look at how SIPs can help make your child's future financially secure-
 
1. Start Investing with a Minimum Amount
One of the top benefits of SIPs in mutual funds is their minimum investment amount. No matter if you already have a child or are planning to have one in the near future, you can start investing through SIPs with as little as Rs. 500 per month.
As compared to other investment plans for children which require lump sum investment, this makes SIPs a more affordable option and allows you to start investing sooner in life.
2. Compounding Benefit
You might have heard experts talking about how small investments made on a regular basis can help you create an extensive portfolio. The power of compounding is that this "8th wonder" enables you to achieve this objective.
If you go with the growth option in a mutual fund scheme, your dividends are reinvested in the scheme to help you generate even better returns. In the long run, this can help you generate handsome returns.
3. Rupee Cost Averaging
SIPs eliminate the need for you to time the market. It comes with a type of automatic mechanism for market timing to eliminate the need for you to worry about when you should or shouldn't invest. As you'll be investing a fixed amount every month, you will get more units if the market is down and fewer units if the market is rising.
While SIPs cannot guarantee high profits, they certainly do an excellent job of stabilising the market volatility for you.
4. Disciplined Investing
The importance of discipline in investing couldn't be stressed enough especially when planning for your child's education. With most other types of investments, it is almost impossible to be disciplined and invest regularly. But the nature of SIPs is as such that you'll automatically be investing money each month.
This will also help you increase your savings and better manage your expenses.
 
5. Tracking Growth Made Easy With SIPs
Another reason that makes SIPs right for your child investment plan is the tracking convenience. Most AMCs now have an online platform where you can easily track the performance of your investment. With this, it will also be easier for you to make adjustments to your portfolio as and when needed.
Understand your goals and risk appetite for searching mutual funds schemes that best suit your profile to begin your SIP investment.
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