SIP : Myths about investing in SIP

Investments are a great way to build up and inculcate a habit of saving while also creating a corpus that can serve you in the future.

Most investments require a time period. Some investments are designed to meet short-term goals. These can help you pay for your children's college or a luxury family vacation. There are also investments that can be tailored to help you build a long-term fund. This fund can be used to meet your retirement needs. You can make sure your retirement years are comfortable by starting to invest and build a corpus early in your career.

It is normal to be bombarded by advice about how to invest your money when you start working. You need to take a step back and understand your investment requirements. You can ask for help from others, but it is best to do your research to fully understand all the options.

SIPs (systematic investment plans) have seen a lot of popularity in recent years. Many investors choose SIP plans to be their preferred investment tool. SIP investments are extremely beneficial for achieving a variety of goals across different terms and for different purposes, as well as for individuals with very different risk profiles.

The SIP investment plan is gaining popularity but there is still a lot of speculation. Given all the hype surrounding SIP, this is understandable. There are many myths surrounding SIP investments. Continue reading to learn more about why the SIP plan could be a great investment tool.

Not for Large Investors.

SIP plans are not for small investors. This is a common myth. This myth states that SIP plans are only for small investors who invest less than Rs. 500 or Rs. 1000 should think about investing in an SIP. This is completely false. A SIP plan is open to anyone. You can invest up to Rs. You can invest up to Rs. 1 lakh if your KYC process is completed.

Avoid investing in SIPs when the market is bullish:

Bullish runs occur when the market is in an upward trend. Many myths say that SIP investments should be avoided when the market is bullish. This is a false myth. An SIP depends on the rupee price averaging to ensure investors their returns. The rupee cost average works well over a long-term period regardless of market conditions.

SIPs not Flexible:

Another myth about the SIP investment plan that investors often believe is that it is more flexible than other investment instruments is the fact that it is not as flexible. Some people believe that the SIP plan's tenure or amount cannot be modified. Another myth is that once you have invested in a SIP plan, it will be impossible to stop investing.
These statements are false. An SIP is one of the most flexible investment options available and it's also easy to customize to suit your needs. An SIP allows you to easily modify the amount and tenure of your investment. An SIP investment is free from penalties, unlike other instruments that charge for the ability to make changes to existing investments.
Some SIP plans have limitations on the amount you can invest and how long you must invest in order to reap the rewards. Ask questions before signing up for any SIP plan to make sure you fully understand the terms and conditions.

Guaranteed Returns

SIPs are gaining popularity and many myths surround them. A common myth is that investing in a SIP will guarantee returns because your funds are regularly invested into the same type of investment.
Although no investment will guarantee profits, SIPs have a higher chance of earning returns than those invested in instruments that are directly linked to the market. This is due to the rupee-cost averaging principle. It allows you to offset market volatility by staying invested for a longer time.

Only for Equity Markets.

It is obvious that there is a lack of knowledge about investment instruments. SIPs are often misunderstood as investing in stock only or in the market. This misconception can lead to mistrust as the equity markets are notoriously volatile and subject to a variety of issues.
Investors are wary of this because it reduces your chances of making a profit. This is false. Through your SIP investment plan, you have the option to choose which type of security you want to invest in. You can decide which type of security you want to invest in based on your goals, requirements, and risk profile.

We hope you have now been able to dispel some myths about SIP investment plans. However, you should still do extensive research before investing in a SIP. Many SIPs can easily be customized to meet your needs. Once you've identified your requirements, it will be simple to find the right instrument for you.