Although equities are said offer higher returns than any other assets but still most of us are very cautious when it comes to investing in equities. There are lot of reasons for it. So let's quickly understand what are these reasons.
1. When to invest ? No one can time the market. Everybody is unsure whether market will go down or rise up from present levels. So the first question that comes to mind is what if the market takes a downturn after you buy?
2. Where to invest ? There are multiple options available which can be confusing at times. Some of these options are bluechip companies, A group companies, B group companies, largecap, midcap, smallcap, numerous different sectors etc.
3. The volatilty associated with equities. People often sell at loss when market goes down, later on they find out that market has suddenly risen and now they don't want to invest at such high prices.
4. It involves lot of risk. Equities have eaten up entire savings of many investors.
5. Investing in stocks means being constantly in touch with the stock market and the news about the companies. This is not possible for most of the business and service class people.
6. Lot of research has to be done to find out the right stock. But it requires a lot of time. Even if you give lot of time for the research still there is a chance that your research may backfire. The reason is because most of us are not an expert.
Now after knowing so many risks involved you may be thinking about dumping the idea of investing equities forever. But what if we have a solution for all these problems. I am sure you will then be very happy to invest in equities and earn handsome returns for a long period of time. Investing in mutual funds through SIP will solve all these problems.
What is a mutual fund ? A mutual fund is an institution which manages money (pooled in from investors) professionally by investing in securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals).
What is SIP (systematic investment plan) ? The Systematic Investment Plan (SIP) is an option for investors to invest a fixed amount in a mutual fund regularly on a particular date of every month. The amount to be invested every month and the date on which this amount will be regularly invested is decided by the investor. Time period for the investment is also decided by the investor and there is also no lock-in period. Any number of units can be redeemed at any time and even added by the investor.
The advantages are:
1. Unknowingly you get into a habit of saving money every month.
2. Since your money is getting invested every month on a regular basis the market fluctuations are dealt with.
3. You don't have to research for the good stocks.
4. When you invest in SIP your money is invested in many stocks so there is no need to worry about a single company going bankrupt.
5. You don't have to be in constant touch with the stock market news.
1. When to invest ? No one can time the market. Everybody is unsure whether market will go down or rise up from present levels. So the first question that comes to mind is what if the market takes a downturn after you buy?
2. Where to invest ? There are multiple options available which can be confusing at times. Some of these options are bluechip companies, A group companies, B group companies, largecap, midcap, smallcap, numerous different sectors etc.
3. The volatilty associated with equities. People often sell at loss when market goes down, later on they find out that market has suddenly risen and now they don't want to invest at such high prices.
4. It involves lot of risk. Equities have eaten up entire savings of many investors.
5. Investing in stocks means being constantly in touch with the stock market and the news about the companies. This is not possible for most of the business and service class people.
6. Lot of research has to be done to find out the right stock. But it requires a lot of time. Even if you give lot of time for the research still there is a chance that your research may backfire. The reason is because most of us are not an expert.
Now after knowing so many risks involved you may be thinking about dumping the idea of investing equities forever. But what if we have a solution for all these problems. I am sure you will then be very happy to invest in equities and earn handsome returns for a long period of time. Investing in mutual funds through SIP will solve all these problems.
What is a mutual fund ? A mutual fund is an institution which manages money (pooled in from investors) professionally by investing in securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals).
What is SIP (systematic investment plan) ? The Systematic Investment Plan (SIP) is an option for investors to invest a fixed amount in a mutual fund regularly on a particular date of every month. The amount to be invested every month and the date on which this amount will be regularly invested is decided by the investor. Time period for the investment is also decided by the investor and there is also no lock-in period. Any number of units can be redeemed at any time and even added by the investor.
The advantages are:
1. Unknowingly you get into a habit of saving money every month.
2. Since your money is getting invested every month on a regular basis the market fluctuations are dealt with.
3. You don't have to research for the good stocks.
4. When you invest in SIP your money is invested in many stocks so there is no need to worry about a single company going bankrupt.
5. You don't have to be in constant touch with the stock market news.
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