Ramzan is a holy period for millions of Muslims. In addition to the practice of fasting, this is a period of spiritual reflection and personal improvement. This is no mean feat and requires considerable discipline. As an individual and a responsible member of your family, it is important to be disciplined in all facets of life, including finance. In this article, let us discuss the importance of disciplined investments through Systematic Investment Plans (SIPs).
The need for investments
Once you get a job and start earning money, financial planning is an important aspect of your personal life. As you grow older, your responsibilities and financial commitments increase. For example, once you get married, you may want to buy a house for your family. Sure, you can take a loan but you still have to make the down payment. And this can be a considerable sum of money. Similarly, you will have many major expenses at various stages of your life. And in order to meet them at the right time in life, you need to start investing.
SIPs are the way to go
There are many investment avenues available these days. Stocks, derivatives and real estate are a few examples. But in order to earn good returns consistently, you have to spend a lot of time and effort to master these fields. This may not be possible if you work in an office with regular work timings. But what if you could invest in an avenue where you don’t have to worry about issues like beating the market or timing the market? Well, the answer for you is mutual funds. And the best way to invest in mutual funds is through Systematic Investment Plans (SIPs).
Make your dreams a reality through SIP investments
When you invest through SIPs, all you need to do is invest a specific amount of money in a particular fund on a regular basis. This can be monthly, quarterly or semi-annually. Whatever time period you choose, remember to be consistent in your investments. This is because, once you start investing regularly, you can practically see your money grow into a large sum right in front of your eyes.
Here is an example: As a parent, you want to provide the best possible education to your child. However, education is very costly these days. For instance, a degree from a prestigious college from the UK or the US can cost around Rs 1 crore. This sounds like a lot of money.
But guess what…
From the moment your child is born, if you start investing Rs 10,000 per month in a SIP (offering a return of 14% per annum), you can hope to earn a corpus of Rs 1 crore in 18 years. In other words, you are able to come up with the funds right in time for your child’s college education.
SIP and investment discipline
There is no other secret to successful investing apart from investment discipline. The power of compounding ensures that your returns grow manifold over time. But for this to happen, you need to start investing at an early age. This gives you ample time to steadily increase your wealth and reach your financial goals.
Once you identify a good mutual fund, it is important to invest regularly. In fact, you can simply give a standing instruction to your bank account to transfer a specific amount of money into the fund every month. This makes your task much easier.
It is said that goals are dreams with deadlines. And in order to make your dreams a reality, you need to start investing right away. With focussed and disciplined investments in SIPs, you can reach your dreams (aka financial deadlines) right on time.