Systematic Investment Plans (SIPs) have now reached 31,000 cr. per month. Of course, everyone's bored of listening to us in the Mutual Fund Industry saying that it's good, but bear with me.
The main reason an SIP is useful is not because it "averages" out the entry price over time in a volatile up and down market. That is just something we as an industry decided is a good thing - but it's an outcome, not a goal.
The main reason is: most of us earn money monthly. End of story. You earn, you spend, you save, you invest. That cycle happens monthly, and therefore you SIP monthly.
But the secondary reason is also: if you don't invest it, you probably will spend it. This is why SIPs make sense - you invest first and spend later, usually. So you end up spending only what's left with you, and that "forced" investing of sorts helps you build wealth for later.
Many of us have the discipline to do an SIP manually every month - otherwise called "lumpsum" investing. This is also fine, and probably better because some months you will have way more money, and some you will be on kadki mode.
Disciplined investing initially works because you save the money, not because it grows. The growth happens in later years. So in the first few years, it's mostly your money, your savings that built your wealth. It's in later years that the incremental savings are very small compared to the corpus you have, so your portfolio grows more because of returns rather than because of what you're saving.
Save a little more every month or every year, and you'll build wealth faster. But building wealth isn't the goal, really, for you. We, as mutual funds, help you build wealth, but your story has three parts:
Part 1: You save and invest your money
Part 2: The money grows because of returns
Part 3: You spend the money
Don't forget part 3. Your wealth doesn't define you. Your life does. Make your life better. SIP is a way to help you, but you have to do Part 3 all by yourself. And that, bro, is the best part of it all.
