Saturday, October 9, 2010
1. Light on the wallet
2. Makes market timing irrelevant
3. Power of Compounding
4. Lowers the average cost
SIPs work better as opposed to one-time investing. This is because of rupee-cost averaging. Under rupee-cost averaging, an investor typically buys more of a mutual fund unit when prices are low.
On the other hand, he will buy fewer mutual fund units when prices are high. This is a good discipline since it forces the investor to commit cash at market lows, when other investors around him are wary and exiting the market. Investors who kept their SIPs going while the Sensex fell from 21,000 to 8,000 in 2008 and sitting on some significant profits now, because they kept up their investing discipline.
4 Good Reasons For Investing Through SIPs
Mutual Fund Gyan|Mutual Fund SIP|