Mutual funds are an excellent way to grow your money in the long term. It’s an investment option that offers a good risk-return trade-off; it’s diversified and professionally managed. With the numerous product options available, you can be spoiled for choice. Each one has its pros and cons, but if there’s one category suitable to help you achieve your goal of creating a corpus promptly, it’s investing in ELSS funds through SIP. When you invest in ELSS funds through SIP, you have multiple advantages. Let’s look at a few:
1. Optimum use of funds
SIP allows you to invest in small amounts regularly. You can invest as low as INR 500 per month. When you invest through SIP, you make optimum use of your funds because rather than letting the money you plan to save every month lay idle in a savings account, you invest it in an ELSS fund. In the long run, you get higher returns as well as add to your corpus.
2. Discipline in investing
A monthly SIP ensures you invest a part of your salary without fail. You have no option but to invest that specified amount; thus, it adds some discipline to your investing. Many investors fail to build a substantial investment corpus because they do not invest in a disciplined manner. Furthermore, investing frequently inculcates the habit of investing regularly and ensures your money works for you beneficially.
3. Less cash flow problems
As stated earlier, you invest a comfortable amount every month, so you don’t face cash flow issues on a month-to-month basis. This also leads to tax gain at the end of the year. Rather than investing a lump sum at the end of the year at one go, it’s easier to invest monthly.
Mutual funds online make investing in SIP extremely convenient. Once you’ve chosen the scheme you want to invest in, all you have to do is turn on your auto-debit feature and invest in the SIP each month. You don’t need to think of writing cheques on a specific date or making transfers this way.
5. Better investment decisions
As an investor, it’s essential to invest money based on your needs and goals. This is not an overnight decision or a last-minute plan; it takes time, effort, and planning. When you have ample time on your hands, you can make an informed decision and pick the right scheme that meets your needs. If you do it at the nth moment, you may invest in the wrong product and not reach your goal.
Mutual funds are a smart investment choice for every type of investor and saver. You should take the time to carefully select the best funds that align with your goals and tolerance for risk. Many DIY platforms and online Mutual Funds apps like Moneyfy can help you capitalize on the right schemes to help you grow your wealth and reach your financial goals.