Top Reasons to Invest in Equity Mutual Funds Through SIP - MySIPonline
Sep 05, 2017 3 min read

Top Reasons to Invest in Equity Mutual Funds Through SIP

Know here the top reasons to invest in equity mutual funds through SIP...
Generally, people think that investing in equity needs a lot of knowledge, and is full of risk. Yes, it is true, but don’t forget that larger the risk larger the returns will be. Furthermore, it is not necessary to have high knowledge in mutual fund investments because they are managed by the expert fund managers on behalf of the investor.

However, you should be aware that equity is the only category which is highly capacitated to provide excellent returns in the long run. One can build wealth to chase all the financial dreams by smartly allocating the money in various equity funds. We do not deny the fact that equity market is one among the riskier, but there is always a better way to complete the risky task as well. Therefore, to experience a hassle-free investment tour in the equity market and earn big returns over time, SIP is the best way which also helps you to reduce the underlying risk to a certain extent.

Here are the six major reasons to invest in equity mutual funds through Systematic Investment Plans (SIP):

  1. Affordable : Some people think that investing in equity funds requires a lot of money due to which they couldn’t invest in them and are left behind to enjoy its amazing experience. If you are also one of them, then you must consider SIP investment because it helps you to invest an affordable & a regular amount of money systematically even in equities. You can start your investment even with a minimum amount of Rs. 500 too.
  2. Capital Gain : The major reason to deploy money in any kind of investments is the growth of capital, and equity fund is the one which can provide excellent growth of the investments over time. Moreover, if you invest in equities through SIP process, then you can also enjoy the benefit of the power of compounding, which helps the capital to grow excellently over the period of time.
  3. Portfolio Diversification : Investing in equity mutual funds through SIP provides you another benefit of diversification in the portfolio. In any uncertain or any unfavorable market conditions, it may be possible that the fund in which you have invested your hard-earned money is not performing well. Therefore, diversification helps you to reduce such risks to the minimum so that you can earn efficient profits.
  4. Tax Benefit Options : You can also avail various tax benefits while investing in Equity Linked Savings Scheme (ELSS). You can get the tax deduction of up to Rs. 1.5 lakh under section 80C of the Income Tax Act, 1961. Furthermore, the ELSS also has the least lock-in period which is of just three years, and the other tax-saving instruments like PPF, NPS, etc., have the lock-in period of more than seven years.
  5. Professionally Managed : One need not to check one's funds daily as they are managed by the expert fund managers who are well experienced in the industry. The fund managers keep an eagle’s eye on the various movements of the volatile market to safeguard your profitability. Therefore, you can invest in equity mutual fund even if they are riskier than the other categories because the fund managers always try to fetch the best possible profits out of various market trends.
  6. Enjoy Easy Liquidity : You can get your money back along with the profits it earned at any point in time because mutual fund investments through SIP allows you easy redemption process. So, you can redeem your equity investments at any time when invested through SIP.

Furthermore, there are many other benefits of Systematic Investment Plan (SIP) which can be helpful for doing hassle-free investments in equities and other categories too.

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