Systematic Investment Plan (SIP) is growing in popularity every month. A good percentage of mutual fund inflows is through SIPs. The public discussion on SIP is so much that some new investors are led to believe that SIP is a product, rather a mechanism.<\/p>\n
Along with this, there are strong arguments about why SIP is not suitable for investors.\u00a0 Both sides mention a lot of factors, but I find one crucial factor missing in this discussion – and that concerns our behaviour.<\/p>\n
The most important benefit of a SIP is that it stops you from being your own enemy. That is it!<\/p>\n
Let us assume that you have drawn up a good financial plan, and this calls for investing x rupees a month. If you implement this in a way that you have to make a specific action every month, there is a very good chance that you would not do it regularly. On the other hand, if you automate this by setting up a SIP,\u00a0 you make a decision initially and then get out of the way. Every month your investment gets made and you make that much progress towards your goals.<\/p>\n
A SIP does not reduce your investment risk. It does not reduce market risk. However it eliminates the behaviour risk.<\/p>\n
<\/p>\n
Related reading:\u00a0 Your mistaken belief in financial willpower<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Systematic Investment Plan (SIP) is growing in popularity every month. A good percentage of mutual fund inflows is through SIPs. The public discussion on SIP is so much that some new investors are led to believe that SIP is a Read More<\/a><\/p>\n","protected":false},"author":4,"featured_media":702,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_themeisle_gutenberg_block_has_review":false,"footnotes":""},"categories":[6],"tags":[18,17,19,16],"class_list":["post-119","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mf","tag-automation","tag-behaviour","tag-progress","tag-sip"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/posts\/119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/comments?post=119"}],"version-history":[{"count":2,"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/posts\/119\/revisions"}],"predecessor-version":[{"id":703,"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/posts\/119\/revisions\/703"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/media\/702"}],"wp:attachment":[{"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/media?parent=119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/categories?post=119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/srinivesh.in\/blog\/wp-json\/wp\/v2\/tags?post=119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}