By Ashish Tyagi, Senior Equity Strategist, Divitas Capital

Confucius, a great Chinese teacher and a philosopher, said that a journey of thousand miles begins with a single step. The journey of personal financial planning is no different from any other journey - one has to get started, the earlier the better. All of us need guidance on managing personal money in order to fulfill goals of leading an outstanding life, pursuing an excellent education and saving for a better life.

Systematic Investment Plan (SIP) is that step, albeit small and steady, in the right direction to accomplish financial goals. Investors are mostly worried about timing the market and tend to wait for an opportune entry point. In many instances, a potential investor may end up not investing at all.

How SIP works?

With SIP, you do not have to worry about market risk and timing because the cost of investment averages out over the duration of your investment horizon. SIP is a financial tool that can create wealth through investment of a fixed amount at pre-decided regular interval, over a period of time. It is easy to understand, convenient to execute and instills discipline amongst investors. In the long run, SIPs can generate high returns even as the financial market rides the waves of volatility.

Benefits of SIP

The biggest advantage of SIPs is that you do not need to time the market. Further it provides twin benefits of power of compounding and rupee-cost averaging. The key benefits are listed below:
  • Disciplined approach to investing
  • Flexibility and convenience
  • Moderate risk
  • Rupee-cost averaging
  • Power of compounding

  • Financial calculators

    It is important for an investor to list down the financial goals and work out a plan with their advisors to achieve the desired goals through SIPs. Financial calculators play a crucial role by estimating the returns on the basis of corpus and tenure. You may visit the Financial Calculator section ( of our website to determine the quantum of savings necessary to achieve your goals.