Learn why an SIP is a great approach for women to build money
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Terry K. Mata - November 8, 2023
- Finance
- 10
- 3 minute read
Terry K. Mata Today, though the participation of women has increased in different professional fields, male-dominated women are still hesitant regarding mutual fund investment. This is owing to the long-term stereotypical gender bias where investment is considered a man’s domain. While a financially adept male member in a family is a benefit, it is doubly beneficial when a woman is also economically aware.
Here are reasons for women to use a SIP investment to build wealth over the long term.
- Article Summary show
Instills financial discipline and the habit of investing
A SIP simplifies your goal of wealth accumulation owing to its autopilot mode. Once you choose the mutual fund scheme depending on y, our life goals, you must set up the auto deduction mode on your savings account. Doing so automatically deducts a predefined amount on a predetermined date towards an SIP to form the estimated corpus to reach your goal. Such automatic debits from your savings account ensure periodic investment and even prevent you from getting swayed due to twin emotions of greed and fear. Rare investment also helps inculcate financial discipline as you can let go of your avoidable expenses to meet your SIP investments.
Needs a smaller investible amount
Generally, fresh investment in the lumpsum form in most mutual fund investments requires an initial minimum investment of Rs 5,000, after which the minimal top-up investment requirement is Rs 1,000. However, in the case of a SIP, the minimum investment requirement is just Rs 500, with some mutual funds even offering SIP plans that begin at Rs 100. Thus, with SIP investments, you can start your investment journey in markets with a small amount without waiting long to accumulate a substantial amount.
The benefit of compounding
Compounding is the process where your interest returns from your market investments remain invested with capital. This helps to yield higher earnings over a long period. For example, a small SIP amount of Rs 2,000 monthly in equity funds at a return rate of 15 percent per annum for 30 years can generate an overall corpus of Rs 1.38 crore.
Offers rupee cost-averaging benefit
The investment amount through an SIP remains the same in every installment, but the unit you buy varies depending on market levels. This process automatically averages out your investment cost. This process automatically averages out your investment cost. This process automatically averages out your investment cost. Note that a higher number of units are purchased when the market prices fall, and a lesser number of units are purchased when the market moves upward.
Eliminates the need for timing your investment
Market timing needs a sound understanding of macroeconomic scenarios, policy impacts, geopolitical trends, technical analysis, etc. If you are a beginner, tracking such factors might be impossible. Here’s where a SIP mutual fund can help. Periodic and automatic SIP investment can save you from the dilemma of market timing depending on volatility.
Conclusion
Now that you know how a SIP mutual fund can assist in generating wealth, instead of depending on your male counterpart for investment or delaying your assets for a later date, begin with a SIP immediately. Doing so will help you create substantial wealth with a smaller investment over the long run. Ensure to use an online SIP calculator before you invest in a SIP. Doing so will allow you to compute the monthly amount you must invest to meet your financial goals by the deadline.
