SIP your way to success !!!

What does the above title mean?.

First of all, when I mean SIP I refer to a concept in the field of investing called Systematic Investment Plan (SIP). In a SIP you invest a small amount each month for a particular period of time. With a SIP you develop a discipline to invest regularly. So “SIP your way to success”means your invest systematically each month to attain success.

In order to start a SIP you need to decide how much you want to invest each month and for how long. For eg. – you can start a SIP for $100 a month for a year or 5 years. You can setup auto-debit facility into your brokerage account and have the money deducted from your regular checking account each month on a particular day. By this way you will not forget to save each month and the money will be saved automatically for you. Most online brokers would allow to SIP at least $100 per month.

Where can I invest the SIP funds each month?.
There are many to invest the SIP funds. The best option is to open a mutual fund account and ask your broker to invest the SIP money into that mutual fund each month. Many brokers will do this for free. Otherwise you can even invest with the mutual fund house directly. Since $100 is a small amount it will not be possible to invest in a stock each month due to transaction costs.

What are the advantages of SIP?
1. You develop a consistent method of investing.
2. In a Mutual Fund investment, you can get more units when the markets are down.This will help you to save a particular amount quicker or your gains will increase since you will average price per unit will go down.

More on SIP strategies in future posts.

Start a SIP tomorrow and SIP your way to a prosperous future !!!


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