Retail investors, even small ones, are investing heavily to take advantage of the stock market boom. However, instead of investing directly in shares, they are investing through a systematic investment plan (SIP). According to data from Amphia, a conglomerate of mutual fund companies, SIP’s investment of Rs 9608 crore came in July, a 27-month high. With this, assets under management of mutual fund industry (AUM) in SIPs have crossed Rs 5 lakh crore.
An investment of over Rs 8000 crore every month
According to Amphia data, investment in SIPs has crossed Rs 1 lakh crore in the last one year. In this way, more than Rs 8000 crore is being invested in SIPs every month. According to data, AUM on SIPs has been growing at an average rate of 32 per cent over the past five years. Experts say retail investors are choosing SIPs as an option to take advantage of the rally in stocks. This is why its AUM is increasing.
Don’t panic and withdraw investments
According to the data, the size of investor capital in SIPs has increased. This is the highest level since Amphi began releasing its data in 2016. Financial advisers say increasing the size of the SIP portfolio is a sign of two things. The first is that investors are investing a lot of money in it. At the same time, she is not in a hurry to withdraw investments in panic in the event of a severe downturn in the market. They say this is a sign of maturity for investors.
What is a sip
This is a mutual fund scheme. In this, you can start investing with a minimum of Rs 500. Most mutual fund schemes have a minimum investment limit of Rs 5,000. But through SIP, you can invest up to 10 installments in such investment schemes. 500 can be invested. This is why it is the best option to start investing.
SIP reduces investment risk
Direct investment in the stock market carries a lot of risk. But investing through SIP reduces risk. If you invest 10 thousand rupees in shares and the market crashes by 10 percent, you lose one thousand rupees. But the first installment through SIP pays a thousand rupees and if you fall 10 percent, you will only lose 100 rupees. This is why SIPs prefer to invest in stocks.
Take care of the lock-in period
The lock-in period in SIP is three years. In such a situation, before investing, be sure to assess your goals and financial need. If you pay the first installment in August 2021, it will mature in August 2024. Likewise, each installment matures for the next three years.