ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Your Route to Becoming a Millionaire in Your Early 30s

Updated on April 7, 2016

Why You Should Invest in Mutual Funds Through Systematic Investment Plan

Invest in Mutual Funds

The average assets under management (AUM) of the Indian mutual fund industry grew 13.8 percent in the financial year ending March 2016. It grew by Rs.1.64 lakh crore to Rs.13.53 lakh crore at the end of FY 2015-16, against Rs.11.89 lakh crore at the end of FY 2014-15, says an article published in The Economic Times in April 2016. Mutual funds are considered to be one of the most effective tools for building a significant corpus.

You might invest with the objective of wealth creation, retirement planning or savings for house, children’s marriage and education. It lets you diversify your portfolio and does not expose you directly to market volatility, unlike stock market investments. There are various types of schemes that carry different risk and have a different objective. Therefore, investments in MF can be made by any individual irrespective of his risk appetite. Also, you can start with as little as Rs.1,000 through a systematic investment plan, or SIP plans.

What is SIP and How Does it Work?

A Systematic investment plan is a disciplined approach towards investing in MFs. It lets you contribute towards a scheme at regular intervals (monthly, quarterly, half-yearly and so on). The instalment amount and the frequency of the contributions are fixed in the beginning. To make regular contributions towards a scheme, you can request your bank for an auto-debit. After this, a certain amount would be deducted from your bank account on a fixed date every month. This amount would then be used to buy extra units of the MF scheme you are contributing to, at the NAV prevalent for the day. The same is repeated every month, every quarter or very half-year (as the case may be), says an article by Birla Sun Life Mutual Fund.

Benefits of Investing Through SIP Plans

Wealth creation requires discipline and consistency and best SIP plans offer you both. They streamline your investments and makes it less burdensome. Moreover, they eliminate the need to time the market as you contribute towards a scheme at a pre-fixed date. Also, you do not need to invest a huge sum of money. You can start SIP plan with Rs.1,000. However, that does not mean this scheme is only for small investors. You can stop and start a SIP as when you wish. It is more beneficial to park your surplus money through this channel in volatile instruments such as equity funds, says an article published in Livemint in April 2016.

How Does SIP Investment Help To Create Wealth?

A systematic investment plan basically thrives on the power of compounding and rupee cost averaging. The more number of times you invest, the more number of times money gets compounded. This helps to build a significant corpus over the long run. On the other hand, rupee cost averaging helps you lower the average cost of investment in the long run and eliminates the need to time the market. When the markets are declining, you buy more units at the same price and visa-versa. Financial advisors asked investors to stay invested in their goal oriented investments and SIP plans even when the markets go deeper into the red during early 2016, says an article published in The Economics Times in February 2016. This is because you can reap the best return from a SIP only when you stay invested in the long run.

When Should You Invest?

The earlier you start the better it is. This will help you harness the potential of compounding to its fullest. You can start when you get your first job and make the contributions larger as you become financially stronger overtime. This is called the top-up facility. You must consult your financial advisor to know about how much you should contribute towards this plan and about its tax implications as well.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)