SIP investment myths busted: Separating fact from fiction for informed investment decisions

A systematic investment plan, often known as a SIP, is a methodical approach to investing. It enables a person to make consistent, equal contributions over the long term to build wealth. A systematic investment plan (SIP) is one of the best ways of investing for retail consumers. It promotes the discipline necessary to save money and accumulate wealth over time. One of the most popular investment options for investors in India is mutual funds. A mutual fund SIP calculator is very helpful in determining investment returns. But there are certain myths about SIP investments. As an investor, you need to separate facts from fiction to gain wealth over time.

Investing in mutual fund SIP is a wise decision to grow wealth in the long run. It can make you rich if you know exactly how to invest. Choosing the right calculator is the most important factor. A mutual fund SIP calculator can help you with this. You will find a calculator on the official websites of financial institutions.

As consumers learn more about the benefits of SIPs, certain fallacies about them have persisted. Some people question the safety, tax-free status, and interest-paying nature of SIPs. Investors must dispel misconceptions about SIPs and choose their investment path to become more financially knowledgeable.

Here are the widespread misconceptions concerning mutual fund SIP investments.

Systematic investment plan (SIP) is only for small investors-

Even though SIPs give investors a way to make smaller investments, it shouldn’t be thought that only small investments may be made through SIPs. Investors can invest as much as they’d like using the SIP approach. It’s true that a large number of high-net-worth individuals (HNIs) and rich investors participate in SIPs to engage in the markets. One only needs to complete the KYC process before one can start investing through SIPs. An investor can regularly invest in the market thanks to SIPs. This strategy is available to everyone who wants to save money for long-term financial objectives. As a result, it is incorrect to assume that SIPs are exclusively appropriate for novice investors.

Systematic investment plan (SIP) can be done only for equity funds-

Investors frequently believe that the SIP way of investing is only available for equities funds. This is completely untrue. Investors have a wide range of alternatives when investing in mutual funds through SIP, including debt funds, hybrid funds, index funds, and theme funds. For instance, you can invest in the ICICI Prudential MNC Fund as well as other types of funds.

SIP is a product-

A SIP investing facility enables investors to make periodic, scheduled investments. Various mutual fund schemes are offered to investors, and the investment amount is deducted and invested in the scheme of their choice. Depending on their financial goals and level of risk tolerance, the person can select from a variety of schemes. In the case of SIPs, let’s suppose an investor wishes to invest Rs. 24,000 over the course of 12 months. They have the option to buy mutual fund units by making Rs. 2,000 monthly investments. SIP is a form of investing option rather than a product.

SIP can’t be modified once selected-

Many investors are concerned that once a SIP is started, it cannot be changed. However, this is not the real case. SIPs are regarded as one of the best methods for investing in the capital markets since they give investors flexibility. It’s critical to note that changes can be made to the amount, time frame, and even the mutual fund scheme after investors finalise their SIPs. The investment amount and tenure can be changed at any time to suit the investor’s needs. Investors can alter the SIP’s amount if their income rises or falls or if they want to save or invest more money.

SIP is subject to guaranteed returns-

Investors have the option to invest in mutual funds on a recurring basis via SIPs. SIP investments in mutual funds are safer than equity market investments. However, mutual funds are vulnerable to market risks depending on market volatility. For an investor, obtaining assured returns in the near term can be challenging, but long-term mutual fund investment can result in capital growth. Investors should understand that there is danger involved when investing in the market. Thus one should be ready before doing so.

SIP in low NAV funds will offer higher returns-

Many investors think mutual funds with lower net asset values (NAV) are more affordable and will therefore provide higher returns. Although the NAV is crucial when investing, it does not indicate the return that a mutual fund scheme can provide. The price at which a shareholder buys or sells units of a mutual fund is known as the fund’s NAV. An investment fund’s NAV changes frequently. The returns are not based on the mutual fund’s NAV.

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