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Set aside small amounts and reap long-term benefits by investing in SIP

TLDR Points

SIPs (Systematic Investment Plans) are the best way to invest for those who want to start small and grow their money. The benefits of SIP:

• Flexible
• Imbibes discipline for saving money
• Pocket-friendly

Introduction

“Success is never accidental.”-Jack Dorsey (Co-Founder and CEO of Twitter and Square)

Is your bank account sapped just days after payday? If you’re left with precious little to save after paying your bills and your shopping sprees, it’s time to take Dorsey’s advice. It would help if you had a plan; one that enables you to save systematically without leaving a dent on your monthly expenses. A simple yet efficient way of saving is Investing in mutual funds through a Systematic Investment Plan (SIP).

Let’s understand SIPs better and find out some of the best SIP mutual funds in which to invest. If you are a beginner, here’s your guidebook.

What is a SIP?

A SIP allows investors to set aside a specific amount of money at fixed intervals. In principle, these payments work like recurring deposits. However, with SIPs, you are not merely saving money and earning interest but investing in mutual funds for long-term gains.

The best SIPs help your money grow. They do so by compounding your investment over time. This means that you earn returns not just on your principal amount but also on your returns.

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Key features of SIP

Before choosing a mutual fund to invest in, you must understand the critical features of a SIP.

• Start small, grow in time: The best thing about SIPs is that they are pocket-friendly. You can start with a small sum to invest. When your salary has grown, you can then increase your investment gradually.
• Disciplined saving: If you are a free spirit looking for the discipline in saving money, systematic payments are the best place to start. It will help you save money as well as earn returns on your savings.
• Choose when to start or stop: Unlike recurring deposit or fixed deposit accounts, you can choose to pause your SIP at any point in time. However, you will need to check with your bank or AMC if they provide this option.
• Compounding returns: You earn returns on your returns. The longer you invest and hold your investments, the greater the chances of your returns compounding.
• Rupee cost averaging: In simple words, you can get more units for a lower price when the markets are down and fewer units when markets are high. This means that your average cost per unit will tend to be lower in the long run.

How to choose the best SIP

SIP is a way of investing; it is not an investment in itself. So, there aren’t many variants of SIP. You can opt for weekly, monthly or quarterly SIPs. Typically, most investors prefer monthly SIPs to coincide with their salary payouts.

But you must choose your mutual fund scheme carefully. Look at its objectives and how it aligns with your financial goals, check its past performance over different market cycles, compare its performance with its peers, check out its rating, and study its expense ratio. If you are satisfied that the fund is right for you, go ahead and start a SIP in it.

SIPs offered through digibank by DBS

digibank offers SIPs in hundreds of mutual fund schemes across many asset management companies. To get started, download the digibank app. Complete your verification and browse through all mutual fund options to choose the best SIP to invest in.

Conclusion

If you are new to investing, begin with small amounts. Start an SIP with digibank by DBS and learn to save on the go. The best SIP plans are flexible and help you grow your money in the long run.

Download the digibank app to get started.

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