SIP Is A Methodology Of Investment Which Is Gaining All The Success It Deserves

Let us now see the changing investment patterns. While savings held in the form of currency or cash have seen an increase in the last couple of years, those in pension and provident funds have seen a slight drop.This change shows that Indians are now more aware of options.Risk appetite of Indian investors is increasing. They take exposure to stocks through mutual funds via SIP investments. As a result, inflows into equity mutual funds are at all-time highs now. Gradually people are realising that the returns they get by investing in bank deposit is dismal and there are other avenues which will give them better returns. This typically happens when interest rates go down. The current rate of interest on fixed deposits at banks ranges from anywhere between 5.5% and 8.75%. Stocks, on the other hand, give much higher returns, depending on equity market performance, and also provide short-term liquidity.With India’s stock markets expected to reach new highs, it isn’t surprising that retail investors, too, want a piece of the pie.

However, when we talk about SIP investments, most people have an extreme view on SIP too. Some consider it as a heavenly safe ‘instrument’ while some consider it as a volcano. First, let us be clear that SIP is not an instrument. It is only a method of investment. For those who simply parrot the word SIP, here is the long form: SIP Investment Plan. Did you notice that there is absolutely no mention of ‘investment in what’? This re-enforces that this is just a methodology of investment and not an actual investment.