Now SIP(Systematic Investment Plan) is a very popular investment term. Everyone are familiar with its pros and cons. But how many of them are doing right sip amounts to fulfill their life goals? Hardly we can count on fingers the investors who are doing right sip amounts; Do you know the reason why?
Why to choose “Right” SIP amount?
As sip allows investors to invest even small amounts, every investor tends to start sip’s with smaller amounts. Even though starting investment with smaller amounts in your initial stages is appreciable , inflation and cost of living expenses would eat-up your corpus to a larger extent!
Confused! Inflation is a silent killer which de-compounds(lose value)your wealth. Besides this, life style expenses would increases along with your income. When there is a salary hike, people tend to spend on these life style expenses rather than investing more! This is a practical problem among the Indians! Cost of living expenses would increase rapidly when there is a splurge in inflation in India.
What to do to combat inflation?
As we can’t control inflation, investing “Right Amount” for “Right Period” in a suitable inflation beating product would solve this problem.
Choosing the “Right Amount” means increasing SIP amount periodically whenever your salary hikes/ received incentives etc. For this you can select “Step-Up” sip which automatically deducts incremental value as per your chosen percentage/amount at the time of the investment.
Choosing “Right Period” includes identifying the goal and its tenure to achieve within that period. You should identify the goal and goal period and continue the investments till you achieved that goal.
But be remember your investment product would beat inflation in the long-run. For that increasing your sip amounts periodically and investing for the right period would allow you to reach your goals on-time!