“Somebody reminded me the other night that I once said "greed is good." I swear I don't remember it but it sounds like something I would say in the eighties.” ~ Gordon Gekko, Money Never Sleeps
Investments today are all about growing your money steadily without giving bad luck a chance. High risk ventures and quick fortune schemes are forgotten tales, the present day investments are backed by concrete risk management and intensive market study. The markets have learnt a lot from the mistakes in the past and with every fall they come back stronger. After all, nobody wants to see another black Monday, nobody wants to be another Harshad Mehta.
It won’t be quite superfluous, if I say that I represent the first generation which grew up with the internet. Most of us have just started earning their own fortune and have started looking for investment options. Of course, one of the fastest ways to grow your money is making direct stock market investments, but still for an average guy who has just started planning for more than the pocket money, stock markets are way too risky. Again, most of us would not want to block our money in a 20 year fixed deposit. We’re not into 30 year stable government jobs anymore; we need our funds to have enough liquidity to serve our need. An attractive option available today for such an investor is the systematic investment plans. In short, the SIPs, if that sounds familiar. The SIPs let your invest in small amounts on a regular basis over the time and still give you the exposure to stock market.
In a systematic investment plan, you invest at regular time intervals for a fixed amount or in a defined range. Your money mostly fights in the equity market or infrastructure debt market, but you do not have to get into the hassle of making the tough decisions; rather a fund manager takes the heat on your behalf. The mutual funds that extend these plans make balanced investments on the behalf of the fund which is made up of hundreds of subscribed SIPs. So even a small investor, becomes a part of a huge fund, and benefits from its power. Also the investor is spared from thinking about the right time to invest, he just has to put in money on fixed regular dates; there is no volatility for him. Some plans also let you average your investment amount, so that you end up investing less when market is up and more when the market is down. What adds to the luxury is that you can fix an ECS mandate with your bank, so that the money would automatically be deducted from your account for the SIP so you do not even have to make a manual transaction.
These plans are also offered in a variety of flavours to suite your taste and appetite. You can go for a monthly SIP if you want to sync your investment with incoming salary. If you are yourself a trader at heart and want to get involved taking less risk, you can even go for a daily SIP where you can decide on the investment on a daily basis. Then there are value averaging SIPs which let you invest according to the market trends. For example, if I invest a 1000 and get a 200 as profit, I would only invest 800 for the next month. Similarly, in case of a loss of 200, I would invest 1200 the next month. A new concept in the market is of flexi SIPs which let you decide on the amount every time you invest and also lets you choose from a range of funds to invest in, every time. These are however not available with every fund.
Although, each of these is a good option and the monthly SIP is mostly preferred, you should still make a smart choice. We make our decisions first, and then they turn back and make us. I hope we are making the right ones. Good Day.
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