SIP by SIP: Why SIP is a great way to create wealth for women

Neha is in her early 30s. She started her career as a business analyst around seven years ago. All the money that she earned over these years was spent on clothes, food and travelling. Now that she wants to buy a car of her own, she has no savings to pay for the down payment. She now realises that she needs to start investing to accumulate a corpus for her long-term goals.

She wants her money to grow fast but lacks the patience to scout for financial products actively. Many working women, like Neha, complain about the lack of time to research and invest in different financial products as they have to manage their jobs and families. But the basic principle of a sound investment doesn’t lie in choosing the ideal product. It lies in making regular investments and repeating the right actions over time. Systematic Investment Plans (SIPs) can help you achieve this goal. Let us tell you how:

SIPs simplify the task of wealth creation as they are planned investments on autopilot mode. Once you pick the scheme in a mutual fund on the basis of your goals, all you need to do is set an auto-debit from your bank account on the desired date every month. This way, you will allocate a fixed amount every month towards your motive of wealth creation. This way, women who splurge on shopping and other activities will automatically curb their urge and route their funds towards SIPs.

SIPs are ideal for long term goals like retirement planning or securing your child’s future. If you start early and invest systematically at regular intervals, you can easily accumulate a large corpus to fund your goals. The best part about SIPs is that you can invest in small amounts at regular intervals – something that even homemakers can set aside from their savings.

Compounding is an integral feature of how mutual funds work. It helps to generate exponential returns over time. So, when you invest small amounts at regular intervals, the power of compounding converts your investments into a decent corpus.

It is not mandatory for investors to make monthly SIP payments towards their mutual funds. While it is ideal that you don’t skip or stop your SIPs, you can never foretell a financial contingency. SIPs, by their very nature, are flexible. So, you can conveniently skip a month’s payment in case of a financial emergency.

There can be times when you feel that the financial burden towards monthly SIPs is too much to take. Or if the fund you invested in is consistently underperforming. SIP investments allow investors to stop their monthly investments at any given time. Neither do SIPs have a lock-in period. This gives women the flexibility to manage their finances effectively.

Women generally are a little wary of market volatility. They prefer to stick to traditional investments like fixed deposits or PPF, which offer fixed returns. You can opt for SIPs for such schemes as well.

Now that you know how SIPs can help in wealth creation, instead of postponing investments altogether, start with SIPs and create your financial portfolio to fulfil your long-term goals.