Is it a good time to start an SIP?

A lot of us tend to delay decisions.

This could be a decision to start working towards a healthier lifestyle, a decision to plan a vacation, or simply to plan one’s finances.

When it comes to planning finances, particularly, there are delays because we may not understand different asset classes, their advantages and disadvantages and what is the best way to invest.

Let’s take SIPs for instance.

A lot of us may be familiar with the concept – these are Systematic Investment Plans, where a pre-decided amount is invested every month or at regular intervals in a mutual fund scheme you have decided.

Sometimes, it is the amount which can deter us. But it need not. SIPs can be done for as low as ₹500 a month. Yes, for most of us, sparing ₹500 every month for investment should not be very difficult.

Another reason we may often delay taking this simple, yet, effective method of investing is because we are wondering whether it is the right time to invest.

Markets have rising, should I start a SIP now?

Markets have been volatile, maybe I should wait for it to stabilise before starting a SIP?

This asset class has shown negative returns for the last two years, should I start a SIP now?

If these are the kind of questions bothering you, here’s an answer – anytime is a good time to start a SIP. In fact, when it comes to starting an investment – it is always, the earlier it is, the better.

This is because it helps in compounding, which can aid returns.

Another aspect investors must remember is that one of the benefits of a SIP is that it helps in averaging out costs – because of disciplined investing.

So effectively in the long run, it would not matter at what time you started an SIP. What would be more important is for how long you have been invested.

 

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This article is for information purposes only. The information provided herein is derived from public sources, believed to be from reliable sources. However, no representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. Views expressed herein involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied herein. Kotak Mahindra Mutual Fund/ Kotak AMC is not indicating or guaranteeing returns on any investments. Past performance may or may not be sustained in future. Readers should seek professional advice before making any investment-related decisions and alone shall be responsible for any decision taken.