Why you can consider getting into the SIP habit this festive season

The festive season in India is synonymous with vibrant celebrations, family gatherings, and the tradition of giving gifts. This year, as you think about all the goodies you would like to give and receive, you should also consider gifting yourself a brighter financial future. This can be done by opting for an SIP investment in mutual funds.

Moreover, the festive season is the perfect time to invest in an SIP, because the holidays often coincide with bonuses and extra earnings. Instead of spending it all, you can use a part of the amount to kickstart your SIP journey. The symbolic nature of starting something new during the festivities, too, can serve as a motivational factor.

So, as the bright lights of Dussehra and Deepawali beckon, let’s explore why now is a good time to invest in an SIP, and how this decision can reap you potential benefits in the long run

• Table of contents

1. Why can you consider investing in SIP?/a>
2. What are the different mutual fund options?
3. Benefits of SIP investments

Why can you consider investing in SIP?

It’s easy to get started

Many individuals hesitate to step into the world of investments due to the perceived complexity of the process. However, starting an SIP investment is remarkably simple. With the help of distributors, numerous online platforms, banks, and fund houses facilitating SIP investments, you can initiate the process without much hassle.

Start with any amount

There's a popular misconception that you need a large sum of money to start investing. But with an SIP, you can begin your journey with as less as Rs. 500. This year, instead of spending all your bonus or extra earnings, consider channelling a portion into an SIP. Over time, even small monthly contributions can accumulate and grow significantly.

You don’t necessarily need any investment experience

For those new to investments, SIPs can serve as a good starting point. One doesn't require an extensive understanding of the stock market or financial instruments. Additionally, many fund houses offer advice to help beginners choose a suitable fund to invest in SIP.

There’s something for everyone

Mutual funds in India come in a vast array of categories, each designed to cater to various financial goals, investment horizons, and risk tolerances. As you look forward to starting your SIP investment journey this festive season, understanding the bouquet of options available can help you make an informed choice.

What are the different mutual fund options?

Equity mutual funds: These funds invest primarily in stocks of companies. The returns are linked to the stock market's performance. While they offer the potential for returns, they are also associated with higher risks. Equity funds are further classified into large-cap funds, mid-cap funds, small-cap funds, and sectoral funds. The newly launched Bajaj Finserv Flexi Cap Fund can be a good starting point for a long term investment in equities.

Debt mutual funds: These funds invest in fixed income securities such as government bonds, corporate bonds, and treasury bills. Compared with equity funds, debt funds are less risky and suitable for investors eyeing potentially stable returns and low volatility compared to equity funds. Debt funds are further classified into short-term funds and income funds. You can consider investing in Bajaj Finserv AMC’s overnight fund, liquid fund, and money market fund if they gel with your goals and risk tolerance.

Hybrid funds: As the name suggests, hybrid funds invest in a mix of equity and debt, aiming to balance the risk and reward. These funds are suitable for investors who want a taste of equities but with relative stability compared with pure equity funds.

Solution-oriented funds: These funds are designed with specific goals in mind, such as retirement or a child’s education. They have a mandatory lock-in period aligned with the goal's timeline.

Thematic and index funds: While thematic funds invest in a particular theme (like emerging businesses or sustainable enterprises), index funds mimic the performance of a particular index (like the Sensex or NIFTY).

Liquid funds: Ideal for very short-term investments, these funds offer high liquidity. They invest primarily in money market instruments and debt instruments with maturity upto 91 days and provide a relatively modest return potential. You can consider investing in the newly launched Bajaj Finserv Liquid Fund after assessing your objectives and risk appetite.

Given this wide array of options, investors can match their SIP investments with their financial goals – whether it is buying a new home, funding higher education, planning a vacation, or building a retirement corpus.

Benefits of SIP investments

Potential for reasonable growth

Historical data has shown that mutual funds, over a long duration, have the potential to offer good returns, especially when compared to traditional investment options. By choosing to invest in SIP, you give yourself the opportunity to be a part of this growth story. However, you must note that past performance may or may not be sustained in the future.

Ensuring financial security

While the festive season is a time for joy and celebrations, it is also an apt reminder of the importance of financial stability. By regularly investing a fixed amount in mutual funds, you not only build a financial cushion but also prepare for unforeseen expenses in the future.

Consistency and the power of compounding

The earlier you begin your SIP investment, the more you stand to gain from the power of compounding. Your investment earns returns, and those returns earn further returns. Coupled with the consistency that SIP offers—where you invest regularly regardless of market conditions—you can set the stage for a potentially substantial corpus.to these benefits, you can use a mutual fund SIP calculator to estimate the future value of your investments. This tool helps you visualize the growth potential based on factors like the investment amount, expected rate of return, and investment duration, providing valuable insights to make well-informed decisions.

Conclusion

While the festive season has traditionally seen expenditures on gifts and celebrations, it’s time to adopt a fresh perspective. Think of SIP investment in festival. By starting your SIP investment in mutual funds this festive season, you’re not just investing money, but building a prosperous future. The joy of gifting oneself financial stability and potential growth is unmatched. So, let the festivities this year mark the beginning of a fruitful investment journey, and may the light of prosperity shine bright on you and your family.

FAQs:

What is the significance of starting a SIP during the festive season?

Starting a SIP during the festive season can be beneficial because it often coincides with increased income due to bonuses and gifts. It's an opportunity to kick-start your savings and investment journey.

How can SIPs align with financial goals related to festivals and celebrations?

SIPs allow you to save and invest regularly, helping you accumulate funds for festivals, vacations, gifts, or other special occasions. They provide a structured approach to achieve these financial goals.

What should I keep in mind when starting a SIP this festive season?

When starting a festive season SIP, consider your financial goals, risk tolerance, fund selection, and the long-term commitment required. Ensure that your investment aligns with your overall financial plan.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully. This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.