Axis Knowledge Nuggets - 8

How Young Investors Can Take Advantage Of Systematic Investment Plan

Young earners have realized the importance of investing. They know that savings alone cannot help them overcome inflation. There is a need to invest a certain portion of their regular earnings in a feasible investment scheme. And that scheme can be mutual funds. Mutual funds are gaining popularity for their ability to drive in the alpha in the long run. Of course, they do not offer guaranteed returns but have the potential to outperform fixed interest offering instruments.

Mutual funds are a pool of professionally managed funds that are actively handled by portfolio managers with vast experience. Mutual funds collect finances from investors and utilize the pool of funds to buy securities, bonds, and other money market instruments. They diversify their portfolio across asset classes, currencies, gold, and even international markets.?Since mutual funds offer so much diversification, they mitigate investment risk over the long term.

Young investors should consider investing in mutual funds through the?SIP?route. Not only does SIP investing inculcate discipline, but it might also help an individual gradually build a sizeable corpus.

Let us find out more about SIP and why one must consider investing in mutual funds through SIP.

Systematic Investment Plan in Mutual Funds

When investing in mutual funds, investors have the option of either making a lump-sum investment or choosing the SIP mode. Systematic Investment Plan (SIP) is an effective way to invest small, fixed sums at periodic intervals in mutual funds. Investors can decide how long they wish to continue their SIP investments as these do not have a lock-in period. One can start or stop their SIPs at any given time. They offer great flexibility for investors.?

The primary reason for SIP to be an ideal investment route for young investors is that they can invest an amount as low as Rs 500 every month in mutual funds. However, to know the minimum investment sum of a mutual fund scheme, investors must refer to that particular mutual fund’s Scheme Information Document (SID).

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For more nuggets around mutual funds, do visit Axis?MoneyPlex

Statutory Details:?Axis Mutual Fund has been established as a Trust under the Indian Trust Act 1882, sponsored by Axis Bank Ltd. (liability restricted to ?1 Lakh).?Trustee:?Axis Mutual Fund Trustee Ltd.?Investment Manager:?Axis Asset Management Co. Ltd. (the AMC)?Risk Factors:?Axis Bank Ltd. Is not liable or responsible for any loss or shortfall resulting from the operation of the scheme.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.