Sunday 24 June 2012

Build Your Portfolio With Systematic Investment Plan(SIP)

SIP is a way of investing specifically designed for those who are interested in building wealth over a long-term and plan out a better future for themselves and their family. It is useful for those who want to get their investments going, but don't have a large sum of money to invest.

i. Power of compounding:
Investment gurus always recommend that one must start investing early in life. One of the main reasons for doing that is the benefit of compounding. The longer the compounding period, the better for you.

ii. Rupee cost averaging:
This is especially true for investments in equities. When you invest the same amount in a fund at regular intervals over time, you buy more units when the price is lower. Thus, you would reduce your average cost per share or per unit over time. This strategy is called 'rupee cost averaging'. With a sensible and long-term investment approach, rupee cost averaging can smooth out the market's ups and downs and reduce the risks of investing in volatile markets.

No comments:

Post a Comment