An investment resolution that you won’t break

We are at our optimistic best in the month of January. We make resolutions at the turn of each year to better some aspects of our lives. Ranked high among our priorities is to get a better hold of our financial lives. Unfortunately though, as the year progresses, the resolve fades away and we are back to square one.

Sounds familiar? If you are nodding in agreement, here are a few tips to help you stick to a resolution that you will simply not break this year.

Do not wait, start small now

The cardinal mistake that most beginners make is “waiting” for the right moment. It is likely that you are postponing your investment journey until you have “enough money” or “extra cash”. But the worst part is that there is rarely a time in life when you feel like having “enough cash”. However, that is no reason to feel dejected. Contrary to popular belief, you do not need a lot of money to begin your investment journey. All you need is a disciplined approach and persistence. For example, you can consider investing mutual funds through systematic investment plans (SIPs).

You can begin a SIP in a mutual fund scheme with as less as Rs 500 in a month. As you would agree, an amount of Rs 500 per month is less than what you would spend for a couple of movie tickets in a multiplex or on an evening out with friends. Thus, directing this sum towards an SIP will not be a burden on your pocket. You also need not wait till you have the “extra cash” to begin investing. The only thing you need to do is do some research to ensure you invest in the right mutual fund.

SIPs instil discipline

As you may have heard numerous times, discipline is the key to success for just about anything in life. It is no different with investing. In fact, an SIP investment can instil that sense of discipline. That’s because when you invest in an SIP, the amount you intend to invest in a mutual fund is directly debited from your savings account.

Soon enough, it becomes a part and parcel of your monthly outgo, much like an EMI. The only difference is that SIP is like a “good EMI”. Unlike EMIs, SIPs help you accumulate wealth in the long run.

SIP your way to a financial goal

Investing in SIPs can also help you achieve your long-term goals such as buying a house or funding your child’s education. This is because SIPs offer the benefits of compounding. Compounding is nothing but your interest amount being reinvested again. Thus, the longer you remain invested in SIPs, the more SIP benefits you reap.

SIPs insulate you from volatility

Systematic investment plans (SIPs) also give you the benefit of rupee cost averaging. This means you buy a lesser number of units when markets are at a high and a greater number of units when markets are low. As a result, you not only average out your purchase cost, but also remain insulated against volatility.

To sum up

Investing through SIPs is not difficult. Plus, it also ensures you stick to your resolution. The month-by-month investment can ensure you build an envious kitty in the long run. So, if you want to reap a rich haul through SIPs, you can invest in a mutual fund offered by Franklin Templeton.

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