Hello Readers!
I hope you are safe from COVID-19!
The ongoing Corona Crisis, and its large impacts on the market, has made us reconsider our cash inflows. Every month, money comes and is spent as per our monthly financial budget, which includes spending on basic utilities, saving money, and investing money.
Currently, in this crisis, income and inflows both are uncertain, and this uncertainty has made us reconsider our financial budget. This time the main focus of the financial budget is towards, saving and more than that on investing to secure future goals.
Investors today are focusing more on their investment. They want to ensure that to whatever extent possible, their regular investments don’t suffer. And for that, they are planning to spend less and looking for more ways that can help their investment not to suffer.
Well, the most important strategy that will work here for their investment not to suffer is automating them.
WHAT DOES AUTOMATION MEAN?
Automation means a system through which the payment of your investment installment is done without any manual intervention. It might be that some of you have automated investments. At the time you automate your investments, you have to choose a fixed date, a fixed interval and a fixed amount, to invest, once you are done with these, your automation of investment is complete.
Mutual Funds already have an option that gives you the facility of automated investments, which is a Systematic Investment Plan (SIP). Through SIP investment in mutual funds, you can automate your long-term investment, your short-term investment, and contributions to your emergency fund.
A systematic investment plan is a mode of investment in mutual funds that allows you to invest a defined amount at regular intervals (monthly/quarterly/yearly) in a fund of your choice. Depending on your long and short-term financial objectives you can choose one or more schemes and assign SIPs of a preferred amount each month.
Automating your investment not only relax you physically but also mentally. They help you:
Inculcating a habit of regularly investing
Even after the financial budget, the expenses each month are not the same. People have temptations that have expenses. To complete their temptations, their expenses are added to their financial budget. These extra expenses added, might lead people, not investing the same amount every month in their fund. This ultimately affects the growth of your investment.
If people, after their spending, decide the amount to invest every month, they can observe that they have varying amounts each month to invest, maybe sometimes nothing left to invest.
In case if people schedule their investment through SIP, they will have put aside an amount for their investment that they can afford to save each month without giving up their essentials, utilities, and some entertainment expenses.
It reduces emotion
When you automate your investments, you save your investment amount in the time of uncertain markets and panics. Generally, during the uncertainty in the market, we turn conservative and think many times, whether we should invest or not.
When your investment is on auto mode, you will let it happen rather than worrying too much about corrections. Thus, ensuring you also invest in growth assets at lower prices, which helps build future value.
Also, your automated investments, let you cut back on expenses rather than cut back on the automated investment, during hard times. Hard times or correction in the market is temporary. If today you cut back your investment, you may feel good regarding your investment today, but you are ultimately effecting the growth of your corpus for your future goals.
Automated investments are just a solution for hard times. Investing through SIP in mutual funds helps you build your investments in a systematic manner which in turn will benefit in the long-term wealth creation.
You can also contact us at Shri Ashutosh Securities Pvt Ltd., for details, we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).