Investment for Beginners

Small Investment of ₹ 500 Is Better Than No Investment

Not everyone can spare a huge sum to invest in a mutual fund or any other scheme in one shot. This is particularly true for those who have just started earning. For them, it is better to invest in smaller amounts regularly and systematically i.e. small SIPs. In this article, we will discuss why it is important to start small SIP if one-time investment is not possible.

Why SIP is good for beginners?

An SIP lets you save a certain sum regularly, and this sum can be as small as Rs.500 per month. So, you do not need to have large disposable income, just need to be consistent to accumulate wealth and inculcate financial discipline. This will help you overcome temptation (to spend all at once) and make logical and systematic financial decisions. Indeed, small SIPs are better than no investments.
Systematic Investment Plans will also prevent you from catching the market volatility and getting burned. A pre-agreed sum you can comfortably shell out per month can save you taxes as well as grow wealth without the need for market timing.

Benefits of investing in small SIPs

Builds financial discipline

Saving an amount habitually imparts staunch financial discipline. You will get into the habit of investing regularly and it will be easier to fight the temptation to spend all your salary.

No need to time the market

You do not have to constantly keep an eye on the market rise and falls. Investing lumpsum requires you to assess the market movements and it can cause you to delay your investment decisions.

Option to automate payments

If you set the amount to be auto-debited on your salary date, it will be easier for you to plan your monthly budget. You do not need to put any additional effort.

Scope for higher returns

It averages out the expense ratio (mutual fund costs), which translates to more returns. This is because when you invest habitually over a term regardless of the market mood, you can own more units when the market is down.

Power of compounding

As mentioned above, power of compounding works here more. Starting small can be advantageous because it creates wealth faster and steadily.

Flexibility for low to mid income investor

Small SIPs offer you more flexibility. As you go up the career ladder, you can even increase the monthly SIP amount accordingly. It is less stressful to invest small but manageable sum.

Easy way to save tax and grow wealth

Investing in ELSS through SIP is non-taxable upto Rs.1.5 lakhs per financial year as per Section 80C of the Indian Income Tax Act.

**Disclaimer: This Article is only for information Purpose and should not be treated as Financial Advice.

Get started with your investments here: Mutual Fund Fixed Deposit

Free Consultation Book an Appointment

For regular updates join our community:  WhatsApp ,Telegram