An SIP is just like having a daily yoga routine or an exercise program. Over time it gives remarkable results. And just like the above examples make you healthy, SIP makes you wealthy!
Should I increase my SIPs?
Short answer: Yes, of course. We are making the following four assumptions:
- You have sufficiently long time horizon of investment. Long term means atleast 5 years or more. That gives these SIPs time to play out and give results. It is possible that the markets may dip in the short term – but don’t lose heart and stay invested.
- You have no immediate and urgent needs for cash. If so, ensure that you park such an amount in liquid or short term mutual funds.
- You maintain an emotional balance (almost like a Yogi) about ups and downs of investments. SIPs over the long run yield better returns as they average out the cost of units over lows and highs. But you need to stay invested!
- Lastly, you invest in your SIPs via Direct Mutual Funds. This alone can generate additional growth of 40% over the long run as you eliminate annual commissions of about 1% per year. Compounding of such commissions can cause a serious dent in your nest egg!
Happy Investing!
