1/20
✨✨SYSTEMATIC INVESTMENT PLAN ✨✨
A complete know-how on this most fascinating investing plan ever designed.
A Thread 🧵
#threadbytradersushma
✨✨SYSTEMATIC INVESTMENT PLAN ✨✨
A complete know-how on this most fascinating investing plan ever designed.
A Thread 🧵
#threadbytradersushma
2/20
What is SIP?
SIP is an investment strategy wherein you invest equal & small amount of money in stocks/MF on a pre-defined date in regular intervals of time over a long period. The regular interval can be weekly, monthly, quarterly, annually etc.
What is SIP?
SIP is an investment strategy wherein you invest equal & small amount of money in stocks/MF on a pre-defined date in regular intervals of time over a long period. The regular interval can be weekly, monthly, quarterly, annually etc.
3/20
The investment amount can be any sum as small as the single unit allowed in that financial asset. The asset class can be MFs, Stocks, ETFs etc.
The investment amount can be any sum as small as the single unit allowed in that financial asset. The asset class can be MFs, Stocks, ETFs etc.
4/20
SIP is also called dollar cost averaging (DCA) or constant dollar plan which involves buying the same fixed dollar amount of shares irrespective of the price at regular intervals in order to reduce the effect of volatility on their total purchase.
SIP is also called dollar cost averaging (DCA) or constant dollar plan which involves buying the same fixed dollar amount of shares irrespective of the price at regular intervals in order to reduce the effect of volatility on their total purchase.
5/20
How does SIP work?
SIP spreads your investment over the period of time. There is no timing the markets as your purchase will continue at whatever the price prevailing on the pre-decided date.
How does SIP work?
SIP spreads your investment over the period of time. There is no timing the markets as your purchase will continue at whatever the price prevailing on the pre-decided date.
6/20
Since the amount invested is fixed and doesn't depend on unit or share prices, fewer units/shares are bought when prices rise & more units/shares are bought when prices drop & ultimately over the period of time the purchase prices average out.
Since the amount invested is fixed and doesn't depend on unit or share prices, fewer units/shares are bought when prices rise & more units/shares are bought when prices drop & ultimately over the period of time the purchase prices average out.
7/20
So SIPs are as the name suggests
"small sips of money" being invested in your asset mug to build a larger pitcher of wealth.
So SIPs are as the name suggests
"small sips of money" being invested in your asset mug to build a larger pitcher of wealth.
8/20
Why should you do SIP?
1. It removes the hassle of timing the market. You do not have to figure out the best time & best price to make purchases. It protects the investors from the temptation of buying high & selling low
Why should you do SIP?
1. It removes the hassle of timing the market. You do not have to figure out the best time & best price to make purchases. It protects the investors from the temptation of buying high & selling low
9/20
& ultimately lead to better results in the long run than trying to time the market on every purchase.
2. Every time your investment is running. So, there is no experiencing any kind of FOMO.
& ultimately lead to better results in the long run than trying to time the market on every purchase.
2. Every time your investment is running. So, there is no experiencing any kind of FOMO.
https://twitter.com/tradersushma/status/1435225460816838658?s=20
10/20
3. SIPs are passive investing tool because you don’t have to watch the share prices every day once u know that you have to continue to invest irrespective of the price.
3. SIPs are passive investing tool because you don’t have to watch the share prices every day once u know that you have to continue to invest irrespective of the price.
11/20
4. SIPs inculcate discipline. Usually, the instalments are linked to bank a/c with auto debit on the set date. Hence you are forced to keep aside a certain sum of money every month & this brings a financial discipline.
4. SIPs inculcate discipline. Usually, the instalments are linked to bank a/c with auto debit on the set date. Hence you are forced to keep aside a certain sum of money every month & this brings a financial discipline.
12/20
5. It helps you to start small with SIPs as small as Rs 500 a month. You do not need large sum to start your investing plans.
5. It helps you to start small with SIPs as small as Rs 500 a month. You do not need large sum to start your investing plans.
13/20
6. Power of compounding works best in this plan. SIPs when continued for longer period of time will accumulate enormous wealth without giving the burden of lump sum investment.
6. Power of compounding works best in this plan. SIPs when continued for longer period of time will accumulate enormous wealth without giving the burden of lump sum investment.
14/20
In spite of SIP being the simplest & most effective form of investing it is most difficult to execute because of its long-term commitment. The duration of SIPs has to be as long as possible to build a considerable wealth.
In spite of SIP being the simplest & most effective form of investing it is most difficult to execute because of its long-term commitment. The duration of SIPs has to be as long as possible to build a considerable wealth.
15/20
Also, there should be no withdrawals in between else the compounding chain breaks.
Here, it becomes quite difficult on the part of investor to continue putting the money over such long period without any lure of withdrawal.
Also, there should be no withdrawals in between else the compounding chain breaks.
Here, it becomes quite difficult on the part of investor to continue putting the money over such long period without any lure of withdrawal.
16/20
The solution to this problem is, treat your Loan EMIs & SIPs at par. Give your loan EMIs & SIPs same priority. You would not like to miss your EMI & degrade your credit score. Similarly, don’t skip your SIP & thus improve your investment score.
The solution to this problem is, treat your Loan EMIs & SIPs at par. Give your loan EMIs & SIPs same priority. You would not like to miss your EMI & degrade your credit score. Similarly, don’t skip your SIP & thus improve your investment score.
17/20
Who Should Invest Through an SIP?
The first-time investors should start their MF/Stock investing journey by initiating an SIP. Also, this method is ideal for those having a regular source of income, such as a salary.
Who Should Invest Through an SIP?
The first-time investors should start their MF/Stock investing journey by initiating an SIP. Also, this method is ideal for those having a regular source of income, such as a salary.
18/20
Why should you invest in SIP Mutual funds?
Because The concept of SIPs is focused on the philosophy of
“Save First, Spend Next”.
So, you end up paying yourself first before spending the salary.
Why should you invest in SIP Mutual funds?
Because The concept of SIPs is focused on the philosophy of
“Save First, Spend Next”.
So, you end up paying yourself first before spending the salary.
19/20
No doubt SIPs are the best strategy ever designed by humans to create wealth over a period of time.
& It works best when started early.
So map out your investments right away if not yet planned & include SIPs as the strategy.
No doubt SIPs are the best strategy ever designed by humans to create wealth over a period of time.
& It works best when started early.
So map out your investments right away if not yet planned & include SIPs as the strategy.
20/20
That's all for this thread.
Retweet for wider audience.
Thank you for your patience.
Keep learning & earning!
#investing
#sip
#personalfinance
That's all for this thread.
Retweet for wider audience.
Thank you for your patience.
Keep learning & earning!
#investing
#sip
#personalfinance
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