don’t stop drinking
Every new investor should start their investment journey through SIP in Mutual Funds. For more information, let us tell you that SIP is a unique financial instrument. Through this, you can easily build a large corpus by investing a small amount every month for a long period of time. But many investors stop SIP when the market falls. But this is the wrong way. Instead they miss a big opportunity by not investing in a downtrend.
Investing without discipline is useless
Discipline is necessary to achieve financial results. No matter how many good mutual fund options you choose without penalty, you will not be able to benefit from them. Now understand why the benefits of SIP are decreasing. Every trader feels that everything is going well when the market is growing. But he gets scared when he falls. But they don’t know that this will break their punishment.
this can be beneficial
Let us understand with an example why you should continue with SIP when the stock market is down. Let’s say if you had made a continuous SIP of Rs 2500 per month from January 2018 to August 2021 in a fund that would have returned 18.25%, you would have invested Rs 1.10 lakh by now. But this amount would have been Rs 1.52 lakh. This amount has increased due to the return on investment.
Those who have stopped SIP benefit less
If someone closed the SIP from April 2020 to September 2020 during the market downturn, he would have invested Rs 95,000 so far. With returns, this amount would have been Rs 1.26 lakh. Here the returns are reduced. The return remains at 15.98 percent.
This is the opportunity in decline
Basically what happens is when the stock market falls, you can buy more mutual units through SIP. That is, you will find it cheaper at that time. This is the point that people often miss. On the other hand, the ELSS scheme is good for tax benefits. This is one of the fund-raising schemes that comes with a tax benefit of up to Rs 1.5 lakh under Section 80C and has the longest lock-in period of three years. The amount invested in ELSS is eligible for deduction and thus reduces the borrower’s tax liability based on his tax liability. ELSS is essentially an equity fund in which at least 80 percent is invested in equities.