What are SIPs, and Do They Add Value to Your Portfolio?

 To build a new habit, you must find a way to include it in your daily routine. Whether it is about eating healthy, exercising, or saving, this is the golden rule that can take you closer to your goals. When it comes to investing, there is nothing better than SIPs. 

So, what is a SIP, and how can it help you build a strong portfolio? Let us find the answers to this in this article.

What is a SIP?

Many individuals confuse SIPs for mutual funds. A Systematic Investment Plan (SIP) is simply a tool to invest regularly in mutual funds. When you invest in the SIP of your choice, a pre-decided amount gets deducted from your bank every month. Typically, SIPs invest your money in equity funds.

Apart from helping you develop financial discipline; a SIP also helps you invest in your desired mutual funds in a staggered manner. It is ideal for salaried individuals looking for a convenient option to invest in mutual funds and build a portfolio.

How Do SIPs Work?

Mutual funds are investment instruments that invest your money in securities like equities, debt, or bonds. Asset Management Companies (AMC) manage mutual funds that are structured to offer the best returns to investors. 

When you invest in them, you buy units of the mutual fund that equals the value of your investment. When you take the SIP route, you buy units every month. You can use a sip calculator mutual fund for more accurate investment information.

How Can a SIP Help Build a Strong Portfolio?

Several individuals may want to invest in mutual funds and accumulate wealth in the long run. However, they may not have the required capital to do a lump sum. For such individuals, SIPs are convenient as you can invest little amounts regularly and increase the value of your portfolio. Moreover, if you want to invest in multiple funds and benefit from different AMCs, SIPs are a better option as they are easier on the pocket.

Another big advantage of SIPs is that you can benefit from both bullish and bearish stock markets. If you were to invest a lump sum, you would have to time it to benefit from a falling market. Considering the volatile nature of the stock market, you can never be sure when is an appropriate time to invest.

However, SIPs allow you to buy more units when the market is down. It helps in averaging out your investment to ensure that you get optimum returns on your investment. When the market is bullish, the value of your portfolio increases, thereby enhancing the returns. Apart from this, you can also enjoy the power of compounding, which can exacerbate the value of your portfolio by manifolds in the long run.

If you are looking for a tax-saving option, SIPs can help you with that as well. ELSS mutual funds are schemes that give you tax deductions as per Section 80C of the Income Tax Act. You can invest in ELSS taking the SIP route to save tax and invest that money for the future.

You also get the flexibility to change your SIP anytime you wish to. If you receive a windfall or get an increment at work, you can increase the amount of your SIP and enhance your portfolio.

Finally, if you do not want to lock your money, you get that option too. With SIPs, you can withdraw your investment anytime you need the money. 

To Sum up

SIP investment is a commitment. If you struggle to maintain and sustain a saving discipline, this is the way forward for you. The host of benefits it offers the investors can help you fulfil your objectives in the long run. For more information or to invest in a SIP today, you can visit PGIM Mutual Fund.

Do You Want Your Money To Grow? Then Invest In Guaranteed Income Plans

 

A worry-free retired life is something everyone dreams of. This becomes possible only with a stable source of revenue that does not fluctuate with the market. Banks and financial institutions offer numerous saving schemes and insurance plans. But they don’t often provide the security one experiences while earning on one’s own.

Getting a plan that matches all your requirements and offering you the security you need in retired life may appear confusing. You have to consider numerous factors like premium, returns, death benefits, etc. The smart choice here is to explore your options in guaranteed income plans.

Such plans ensure a guaranteed income for your family after your retirement or your untimely death.

What are guaranteed income plans?

Guaranteed income plans are a non-participating scheme that offers you a regular income. You pay a fixed amount every year as a premium for an agreed-upon number of years per the scheme. You can decide your age based on your financial strength and age. The insurer determines your premium accordingly. Upon maturity of the plan, you begin receiving a specified amount like a regular salary. The number of years and the amount will depend on the type of plan you chose, the premium you paid and the amount you agreed upon.

Explore your options among guaranteed income plans in India and enjoy the following benefits:

It reduces the risk of returns

People about to retire always have their own apprehensions towards making high-risk investments. They often receive recommendations to invest in the schemes like life insurance policies. These ensure a return for their families in the instance of their untimely death. If you invest in a guaranteed income plan, you don’t have to worry about this. The scheme minimizes the loss of your income when you retire.

The benefit upon the untimely death

In the instance of the unfortunate death of the policy-holder during the insurance tenure, the insured's nominee receives the basic amount promised in the contract. This is in addition to other bonuses the person may have saved. The payout is made, in general, for 15 years. In any other instance, it will continue as per the term mentioned in your insurance policy. If death happens after the end of the premium-paying tenure, the nominee receives the sum assured along with any other benefit as per the contract.

Tax benefits

Your investment here is eligible for tax exemption under Section 80(C) annually. Upon maturity of your policy, your returns are exempt as per Section 10(10D). Know that these exemptions are made available based on the terms and conditions described thereof.

Periodic payments after the first year of premium

You start receiving a fixed amount from the start of the second year of your insurance term. You can determine the interval. The payout remains same through the term of the policy. This provides you with a source of extra income. And you can take care of the small expenses that exceed your monthly budget.

Eligibility requirements

Guaranteed income plans are reserved for the salaried. The minimum age here is 18, and the maximum is 50. And when it comes to insurance tenure, the minimum is 34, and the maximum is 75.

Tips to maximize your returns

Do the following to maximize your returns from your guaranteed income investment scheme:

Repay all your debts: Availing a loan is a breeze for a salaried individual. But debts affect your savings. Repay your debts at the earliest to maximize your returns from your insurance policy.

Plan your retirement in advance: Calculate the expenses you expect during your retirement. Have a clear understanding of your health at the time. It will give you an idea of how much you should aim to save to lead a tension-free life when you grow old.

Prepare for an unexpected emergency: Anything can happen at any time. Having an emergency fund helps you handle it without having to worry about the loss of income it may cause. In a general scenario, it should be equal to the salary of five or six months.

Research and choose from among the numerous guaranteed insurance plans available. You will never regret your choice. See to it that you get it from a reputed insurer.