What Are The Rules Of Successful SIP Planning?

One of the most popular and successful plans for an individual’s lifetime wealth generation process has been the SIPs or Systematic Investment Plans. Investors, while committing to SIP Planning promise to set aside a fixed amount periodically (monthly) for mutual fund investments. Using rupee cost averaging, the strategy promotes the habit of being disciplined as well as reduces the risk associated with the money market. A plan is required for success and the simple initiation of an SIP alone would not lead to this outcome.

This article has covered the effective principles of SIP planning, including important topics such as starting early and maintaining consistency, raising your SIP amount yearly, keeping an eye on your investments, and much more. Let’s look at each of these guidelines and see how they will help create a winning SIP plan.

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Why is SIP Planning Important?

The disciplined approach of SIP towards wealth creation has made it the most sought-after investment tool among investors. SIP Planning makes it possible for one to invest in mutual funds on a regular basis, usually on a monthly basis and is thus enabled both by new as well as seasoned investors. But why is SIP planning so important?

Disciplined Investing

It encourages habitual investing, which upholds discipline in saving. It ensures that a given sum will be invested on a regular basis, which encourages saving and investments without regard for market timing.

Rupee Cost Averaging

Rupee cost averaging is an important benefit of SIP planning. You buy more units when the price level is low and less during the period that has prices high. This is because you are investing a fixed amount at regular intervals. It reduces the brunt of volatility in the market by bringing down the average cost of investments.

Power of Compounding

SIP planning gives you the benefit of compounding. It reinvests returns from your investment over time to make it compound exponentially. You will gain more from compounding the earlier you begin your SIP.

Convenient and Cost-Effective

SIP makes investment accessible to everyone as it avails you for beginning with a small amount, sometimes as low as ₹500 per month. You can progress your wealth with SIP planning; you don’t require a huge initial investment.

Long-term financial goals

SIP planning works best for long-term financial goals such as house ownership, retirement, and child education. Once you invest regularly over time, a substantial amount of wealth will be generated so that you can afford to meet all the above goals without breaking the bank.

Flexibility

SIP plans are so flexible that you can change your investment amount according to the changing income options available. You can thus adjust SIP planning according to the changes in the inflow or the goals that demand greater investment.

Rules of Successful SIP Planning

Start Early: The Power of Compounding

The other most important rule in SIP planning is to begin as early as possible. This is because the compounding effect makes time the main crucial thing needed for money growth; meaning that the earlier you start, the more it gives time to the money to grow. Compounding is earning interest on your principal, which also goes into interest already gained. Hence your investments grow exponentially over time.

For example, if you begin saving at the age of 25 and invest ₹5,000 every month in a mutual fund with an annual return of 12%, then by the time you are 55 years old, you would have saved about ₹2.5 crores. At the same time, your investment will be around ₹80 lakhs only when you start investing when you are 35 years old. After all, as far as investing is concerned, time is an ally. The more will work to your advantage the earlier you begin.

Invest Regularly: Discipline Is Key

The aim of SIPs is to cultivate a culture of disciplined investment, and nothing better than SIPs can do that. The underlying principle of SIPs is regular investment without anticipating market conditions. Your money flows through positive and negative market cycles to keep constancy and long-term growth.

Regular investment smooths out the market oscillations by enabling you to buy more units at lower prices and less at higher ones. This rupee cost averaging gradually pays off at the average price per unit, which reduces your risk and increases returns.

Increase Your SIP Annually by at Least 10%

Many investors make a big mistake of staying with the same SIP amount for years. In the same way, one should continue investing steadily; one must revise the SIP amount every year to account for one’s increasing cost of living as inflation increases and incomes increase if one has at least a 10 per cent increase in one’s SIP every year.

For example, you will save over ₹11,500 a month had you been starting to invest ₹5,000 a month since the beginning of the first year and had also increased it by 10% every year after ten years. That surely will boost the wealth that you accumulate in time.

Monitor Your Investments, But Don’t Over-Monitor

While watching your SIPs, you must be vigilant but not too vigilant. Market movements are well set, and SIPs are for long-term investment. You might continue to tread up and down, monitoring your portfolio every day, or even once in a week which may cause undue stress and you might even decide rashly while the market is low.

It will help you ensure your portfolio aligns with your financial goals if reviewed once or twice a year. Use these check-in periods to determine whether your fund picks are doing what you expected, but resist the urge to change your portfolio regularly due to minor market movements.

Don’t Panic During Market Corrections

Market corrections are a regular occurrence in the natural economic cycle. It could be pretty unnerving for the investor when these corrections cause the mutual fund prices to decline. Corrections, however, represent an opportunity rather than a threat for SIPs. Your SIP continues running and you get more units for the same amount of investment in case of a market fall. Think of it as buying more units at a lower price, almost like a “buy two, get one free” scheme.

Stick to the plan and do not let fear make you pull out. More units will make better use of increasing markets and provide higher returns. Time heals all wounds and allows investments to grow and stabilize.

Always Choose the Growth Option

The two choices that mutual funds offer are growth and dividend payout. Growth increases the NAV of the units by investing your profits back into the fund, thereby increasing capital appreciation over a longer term.

The dividend option, which pays out profits to investors at regular intervals, may seem rewarding over the short term but prevents investors from building their wealth over the long run. Always opt for the growth option for your SIPs if you have an intention of gradual accumulation of significant wealth.

Stay Loyal to Your Funds

More than choosing the right fund, you have to persist with SIP. Investors make a mistake often by switching between funds in a chase for high returns by focusing on short-term performance. This may prove detrimental to your long-term goals as it disturbs the compounding and rupee cost averaging.

Choose a fund and keep up with the investment as per your investment horizon, the fund manager’s track records, and the performance history of the fund. This resilience and faith will reward you as the market stabilizes and expands.

Don’t Miss Your SIP Payments

The core idea of SIP is planned periodic and disciplined investment. Missing a single SIP instalment may impact your overall financial plan because you end up missing one particular month’s growth. Hence, it is very important to get an automated payment option if you want to ensure that you never miss any kind of instalment.

Here, most investors tend to think that a few months of missing payments will have no important impact, but even the smallest of them could cause damage to your portfolio’s long-term growth. So, not to miss your SIP contributions and consistency is the key to success.

Don’t Redeem Unless Absolutely Necessary

The redemption of your investments should be done only in extreme necessity under the last rule of successful SIP planning. Since SIPs are given for long periods of usage, early redemption may keep your portfolio away from the true benefit of the same.

More often, investors redeem their SIPs when the markets are facing downturns due to fear or need for cash on hand. In contrast, this undermines the compounding and recovery of the market. Let your SIPs grow and leave them untouched if you don’t have emergency money or other major goals for the money.

How To Start SIP With Sanjhi Poonji?

Sanjhi Poonji is one of the very easy places to start a SIP. Sanjhi Poonji by RKFS is an easy-to-use app that helps investors start investing to grow their wealth systematically.

Download the Sanjhi Poonji App

Download the Sanjhi Poonji app. You will be starting your SIP by downloading the application of both iOS and Android operating systems. In addition, you can start your SIP on the website also, which is very user-friendly with a seamless interface.

Complete KYC Process

You need to complete the Know Your Customer procedure before you can start investing. All Indian mutual fund investors need to undergo this process. Sanjhi Poonji has a straightforward and speedy online KYC process. With your PAN card, Aadhaar card, and a couple of more personal details, you can complete the KYC. Such processes normally take a few minutes.

Select a Mutual Fund

After your KYC is done, you get to select the mutual fund in which you would like to invest. Sanjhi Poonji offers you an array of all mutual funds, such as small-cap, large-cap, mid-cap, and hybrid funds. You can choose from different mutual funds according to your investment time horizon, monetary goals, and risk appetite. Funds can also be divided into categories based on asset allocation, risk tolerance, and performance.

Choose the SIP Amount and Frequency

Once you have opted for a mutual fund, you need to determine how much you want to invest in SIP every month. Sanjhi Poonji ensures that SIPs are accessible to all types of investors as you can open one with as little as ₹500 per month. You can also opt for the frequency at which you would like to invest in SIP—either monthly, quarterly or any other periodical frequency.

Set Up Auto-Debit for Payments

You can link your bank account to the Sanjhi Poonji platform so that the process will be streamlined and automated. Once the accounts get linked, you should create an auto-debit instruction so that the SIP amount will be automatically taken out from your account on the selected date each month. This ensures that you do not have to monitor the due dates and guarantees that you will never miss a SIP instalment.

Monitor Your Investments

Even though SIPs are a long-term investment, it is still important to glance over your investments at times. With the Sanjhi Poonji app and website, you can track your portfolio’s performance instantly, see the Net Asset Value of your funds, and analyze your returns. Since SIPs are a long-term investment, short-term fluctuations are normal, and over-monitoring is better avoided.

Final Words!

The keys to successful SIP Planning are patience, discipline, and astute decision-making. You can put yourself on the path to long-term wealth creation by adhering to these fundamental guidelines: start investing early, make regular investments, increase your SIP amount, maintain your fund loyalty, and only redeem when absolutely required.

SIPs are a steady, dependable way to gradually accumulate wealth rather than a quick-fix scheme. You can maximize the returns on your SIP investments and reach your financial objectives by adhering to these guidelines.

Moreover, investors can get in touch with us at 9810325138 to create a future with financial freedom.

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