Systemic Investment Plan or SIP have been a long existing option in the mutual funds’ category of investments for a long time. In the recent years, they have become a major player in the field, with many people opting for them. The prime reason for that is that they are a very practical approach to the market and have a very systemic approach to investments. With a very ardent philosophy of “Save first, spend next”, SIPs are the best way to go for many reasons. With the ever changing market and the ups and downs, the one thing that remains almost constant is an SIP.
SIPs come with a lot of benefits, that are one of their biggest attractions. You can avail tax cuts under section 80C, giving you tax exemption, zero exit load and wealth accumulation. With this sort of efficiency and benefits, many people often wonder if there are any downs in the SIP scheme. There are many scary moments during the market shift and ups and lows in stocks which make people quit on them. Here are some primary reasons why people often bail on SIPs.
The market is down
This is perhaps one of the biggest reasons why people bail on their SIPs. The market always experiences its prices going up and down. But quitting on your SIP because its down is not a fair thing to do. SIP have always been long-term investments and comes with benefits if they are given the time they need. The companies you invest in with SIPs make it their job to invest the money they collect from you and invest them into some good quality stocks. This gives you security and even if the prices of these stocks go down temporarily, it’s wise to give them some time so that they can make your investment worth it.
Yes, the monthly payments you need to do for your SIPs are fixed. It can be a trouble for many people who have a lot of EMI at their hand to pay the designated amount for their SIPs. Many cases of this occur due to the people buying houses and their EMI becoming a concern for their pockets. And while it is perfectly okay to stop investing in SIP because of that, again the point of the long-term benefits come at play. While your investments elsewhere are important too, SIPs will help you through a lot in the future like during your retirement. It is as essential to think about that as it is to think about your EMIs.
It is a clear thing that if you are investing in SIPs, you must be committed to them for long-term to get hefty benefits apart from the ones they are providing you at hand like tax cuts. Bailing on them because of the market isn’t a wise decision and you should definitely not put a break to your SIP for whatever reason. If you want to reap full benefits out of your investments, you should stay committed and end up with a lot more money than you started off with.