Systematic Investment Plan (SIP)
A Systematic Investment Plan, generally known as SIP, is a financial facility proposed by mutual funds to investors to invest in a disciplined way. SIP facilities allow investors to invest a set amount of money at pre-defined gaps in the selected fund strategy. The fixed amount of money to invest can be as low as Rs. 500 and more, while the pre-defined intervals for SIP can be on weekly, monthly, semi-annually, or annual basis. With the SIP route to investments, an investor can invest in a time-bound form without stressing about the market dynamics. Plus, it stands to help in the long term due to reasonable cost and the power of compounding. However, there are different kinds of investments, such as one-time or monthly investments, so let's discuss them in detail.
Meaning Of A One-Time Investment Plan
Advantages of One-Time
Investment
●
Capital
appreciation: Capital market investment profits depend on the market
performance. Stock prices can rise or fall in the short term. But in the long
run, gains often outweigh the possibility of losses. Moreover, one-time
investments allow investors to grow their wealth more effectively.
●
More
profitable returns in the long run: With a one-time
investment, you will get better returns and profits in the long run. The reason
is that the total amount stays invested for the whole term in a one-time
investment. While with multiple premiums, the amount paid generally remains
invested for shorter periods. That's why a one-time investment is a better
option to earn more profits.
●
Low costs: If you go
with multistage investments, you will need to pay the transaction costs every
time you invest. But in a one-time payment, you only need to pay the charges
once. Thus, a one-time investment implicates a lower cost.
●
Convenience: One-time
investment is one of the most convenient options. There is no need not to worry
about forgetting due dates or arranging future premiums. You can pay the total
premium when the investment policy starts, and there will be no chance of the
policy lapsing due to skipped payments.
Meaning Of Monthly Investment Plan
A monthly investment plan is a scheme where the investor makes
investments to obtain a specific sum of money every month as the payout. The
monthly payout amount is basically based on investments accumulated in the plan
over time. However, many monthly investment plans provide a hassle-free way of
securing regular income afterward based on accumulated savings. Consequently,
monthly investment plans are suited for retired individuals pursuing regular
income during their old years.
Benefits of a Monthly
Investment Plan
●
Insured
Regular Income: It is the most significant benefit of monthly investment
plans. It is an excellent incentive for people to invest their savings during
working years to secure life after retirement financially.
●
Disciplined
Savings: Discipline is an essential aspect when it comes to investments.
People usually begin investing enthusiastically but fail to maintain it over
time. However, with monthly investment, instead of investing all the money at
once, one can invest shorter amounts every month to make a large retirement corpus.
Moreover, this method is easier to achieve without any financial stress.