Dhanteras 2023: Should you start investing in stocks through mutual fund SIPs?
systematic investment plan (SIP) method hold good for stock investments too? Undoubtedly, channelling your investments into stocks via the SIP route can effectively mitigate the risks associated with equity investments. The rationale behind this lies in SIPs enabling investors to acquire stocks at various price levels over a designated period, effectively smoothing out the overall investment cost.
This strategy is commonly referred to as cost averaging and ranks among the most proficient techniques for risk reduction in the stock market. Certainly, it’s important to acknowledge that there are no assurances that investing in quality stocks via SIPs will amass substantial wealth or provide a sustainable source of passive dividend income.
Nevertheless, it remains a prudent investment strategy capable of facilitating the realization of your financial objectives over an extended period. To buy stocks in three or four installments or follow stock selection through the SIP route depends on myriad factors, which must first be assessed and then regarded accordingly.
Occasionally, captivating numbers emphasize the outperformance of SIPs in ‘high-quality’ stocks, showcasing remarkable returns exceeding market averages.Adopting a balanced investment approach involving placing one’s funds into top-tier stocks for an extended duration helps. Such quality stocks often belong to firms boasting robust financial foundations, capable management teams, and a consistent history of profitability.
These enterprises tend to endure market fluctuations more resiliently and tend to yield superior returns over extended investment horizons. The approach you choose for your investments, whether it’s SIP or lump sum, has minimal impact on your
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