Learn how to Start SIP Investment. Unlock wealth creation with SIPs
By Gullak Team
Jan 16, 2023
6 min read
Here's a question: Do you believe that only the affluent can invest in mutual funds, while the rest of us are left to watch our hard-earned salary diminish with expenses? If so, let's debunk this myth for good. Financial independence is not just a daydream anymore for the middle and upper-middle-class Indians. With a strategic approach and disciplined investing, you can turn your hard-earned savings into a substantial wealth pool. Welcome to the world of Systematic Investment Plans (SIPs), where even ₹700 per kickstarts your journey towards wealth creation.
So, how does one start a SIP investment with ₹700? It may seem like a small amount but investing this small amount consistently over a long tenure will unlock massive wealth for you. This blog will guide you on how to start SIP investment with Rs. 700 per month, enabling you to gradually build your wealth while managing risks effectively.
Our primary focus here is on high-risk funds, which have a significant risk-reward dynamic when compared to most other mutual funds. Despite this risk, seasoned investors refer to high-risk funds as Best SIP For Long Term due to their potential for generating substantial returns over time.
Understanding SIP Investment
Before diving into how to start a SIP investment, let's first understand what it is. In simple terms, a Systematic Investment Plan (SIP) allows you to invest a fixed amount periodically in a particular asset. The frequency of these investments could be daily, weekly, monthly, quarterly, semi-annually, or annually, based on the investor's convenience. It serves as a disciplined approach towards investing and helps in averaging out the cost of units purchased(rupee cost averaging).
Why Choose SIP?
- Affordability: You can start investing with as little as ₹700 per month.
- Rupee cost averaging: Since you invest regularly regardless of market conditions, your overall purchase cost reduces over time.
- Power of compounding: The returns earned are reinvested, creating further gains—this is the magic of compound interest!
To explain this, let's take a simple example.
Suppose you're investing ₹700/month in an asset like Gullak Gold+ at 15% annual return.
- After 1 year, you'd have ₹9114: Invested amount- ₹8,400
- In 5 years, you'd have approximately ₹62,000: Invested amount- ₹42,000
- In 10 years, you'd have approximately ₹2L: Invested amount- ₹1.11L
- In 20 years, you'd have approximately ₹10L: Invested amount- ₹1.68L
Thus, the compounding effect significantly enhances the overall investment value over time.
Steps To Start A SIP Online
Having understood the what and why of SIPs, let's now explore how to start SIP online:
- Choose a reliable platform: Choose a trustworthy app like Gullak that offers competitive returns and secures investment opportunities.
- Complete the KYC process: Submit essential documents like PAN, Aadhar, etc., for the Know Your Customer (KYC) process.
- Choose the asset: Research and select a scheme that aligns with your financial goals and risk appetite. In Gullak’s case, it’d be choosing between Gullak Gold+, Gold & Silver.
- Set up SIP: Specify the SIP investment amount (₹700 or more), frequency (monthly, quarterly), and duration (fixed or perpetual).
- Link Your Bank Account: Link your bank account to facilitate automatic monthly deductions for the SIP.
Alternative Best sip for long term - High returns but low risk
What if there’s a way to get the best of both worlds - High returns but low risk SIPs for the long term? This is where Gullak Gold+ comes into the picture. Gullak Gold+ provides investors with extra 5% gold every year on top of Gold’s annual returns. On an average, gold as an investment has given approximately 11% returns per annum. With the guaranteed extra 5% from Gullak Gold+, investors get the chance to unlock ~16% returns per annum. This is the highest return gold asset in India & beats 90% mutual funds in returns.
Gullak Gold+ delivers stellar returns, while being a low risk investment:
- Underlying asset is Gold: Considered a safe haven for investors & has been known to deliver good returns historically.
- Gullak provides the extra 5% by leasing investors’ gold to India’s Biggest jewellers. These jewellers provide investors with the extra 5% gold every year.
- All jewellers are vetted by Augmont(India’s 3rd largest Gold refinery & Gullak’s gold partner) for annual turnover, creditworthiness & experience in the market.
- Gullak provides a 100% bank guarantee on all the Gullak Gold+ investments, hence your investments are always secure.
Comparing SIPs and Lump Sum Investments
Understanding the differences between SIP and Lump sum investments is crucial before deciding how to invest in SIP for beginners:.
| Components | SIP | Lumpsum |
|---|---|---|
| Investment Amount | As low as Rs. 700/month | One-time large amount |
| Risk Appetite | Suitable for risk-averse investors | Preferred by high-risk takers |
| Perks | Rupee cost averagin | Need to time the market |
Factors To Consider Before Starting A SIP
While you have learned how to start SIP, it's very important to consider certain factors before making an investment decision:
- Risk Appetite: Evaluate how much risk you are comfortable taking, that is, what is your risk tolerance level before choosing the asset.
- Investment Goals: Define your financial goals – buying a home, children's education, retirement planning, etc & decide on the tenure for the same.
- Plan Performance: Review the past performance of the asset you're considering.
Conclusion
Starting a SIP with just ₹700 per month can indeed set the ball rolling towards wealth creation in the long run. Thus, SIPs are crucial to your investment journey. Why not begin this today? Explore Gullak Gold+ to get the highest returns on gold in India. SIPs start from just ₹700/month in extra 4% option of Gullak Gold+
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Frequently Asked Questions
How to start SIP in mutual funds?
How to start SIP online in direct mutual funds?
What is the minimum amount required to invest in SIP for beginners?
Can I change the amount I have chosen to start a SIP investment with?
