6 ways mutual fund SIPs may help you beat inflation
inflation is eating into the savings of low- and middle-income families. Which road is to be taken or which financial instrument is to be chosen for earning an extra buck is a big worry for many.
The simple and proven answer to these queries is the Systematic Investment Plan (SIP) of a mutual fund (MF) scheme. SIP is a robust strategy that may help savers beat inflation and may grow their money. However, it’s important to note that SIP can be an effective tool to create wealth but there is no guarantee to generate returns.
Here are some advantages of SIPs:
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1) Steady Investment
SIP enforces financial discipline. By committing to invest a fixed sum of money regularly, you develop a habit of saving and investing. For the beginners and young investors, SIP is best suited to serve their goals as one need not have to wait for an investible surplus to begin an MF investment.
This consistent approach may help investors to generate inflation beating returns. While the value of money decreases over a period of time due to inflation, SIP investment may grow steadily.
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2) Rupee Cost Averaging
Essentially, SIP is an investment strategy that doesn’t rely on timing the market. Instead, it allows you to purchase more units of a mutual fund when asset prices are low and lesser units when asset prices are high.
