Top 7 Benefits of SIP
- Affordability: Anyone can start investing for as little as Rs.500 in the fund of their choice through SIP.
- Rupee Cost Averaging: The investor gets more units when the price is low and less units when the price is high, leading to a lower average cost per unit in the long run.
- Compounding: Small amounts invested over a long period of time yield better returns than lump sum investment due to the power of compounding.
- Financial Discipline: It inculcates the habit of disciplined investment in investors.
- Emergency Fund: SIP can act as an emergency fund if the investor chooses using one-time withdrawal facility.
- Budgeting: The investor may give standing instructions to his bank to invest regularly in SIP, inculcating the habit of “save first, spend later”.
- Convenience: Since the amount is automatically deducted from the bank account, it is a matter of convenience for investors.