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Step by Step, Coin by Coin. Build Wealth with the SIP

Small investments made consistently through SIPs can grow into meaningful wealth over time. Take one step at a time towards your financial goals and build a secure future with disciplined investing.

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Grow Your Money Smartly with SIP

Plant your money today and watch it grow steadily with a Systematic Investment Plan (SIP). start building your wealth now with mNivesh.

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Mutual Fund Wealth Creation Marathon

Building wealth in Mutual Funds is a long-term marathon, not a sprint. Stay consistent and achieve financial freedom over time.

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Meaning and Benefits of Sip (Systematic Investment Plan)

It’s everyone’s desire to have the good things in life, buying an exotic car, a beautiful home, and an exclusive vacation to someplace around the world. Achieving these desires will require doing something extra. Investing through a Systematic Investment Plan (SIP) in mutual funds is a viable option to go forward with. So, let's have a look at what SIP means, how it functions, and be of help to you in achieving goals.

What exactly is SIP?

A systematic investment plan is a system of investment that can be used in order to save money while also reducing the risk of investing. The system is often used by investors in order to reduce the chance of making bad investment decisions. These mutual funds can be used to invest in shares, bonds, and a variety of other financial instruments.

How does SIP function?

A systematic Investment Plan or SIP is a way of investing in stocks. The investor makes it a habit to invest a fixed amount of money at regular intervals and in the same proportion to various stocks. This helps the investor diversify among various stocks with less risk as compared to putting all their money into one stock. The maths behind the Systematic Investment Plan is simple. The investor gets to decide how much he wants to put in his investment every month and how long he wants to save. The systematic investment plan does not just depend on market timing but works with all time frames to reduce risks of volatility and maximize returns. It can be beneficial for those who are passively invested in their investments.

Investing in a SIP has a number of advantages:

1. Compounding power: Compounding is an investment concept in which money earned on the investment is reinvested and thus also earns interest. Compound interest can be thought of as having multiple rates. Compound interest is the root of wealth for most people, because it enables investors to earn interest on their money over time, rather than only when they take it out of the account. To understand why compounding makes such a big difference, consider how much an investor would need to earn just by saving some amount per day in order to become a millionaire at age sixty-five.

2. Low Initial Investment: With just Rs. 500 per month, you can start investing in mutual funds using the systematic investment plan (SIP). This can be an affordable way to invest each month without hurting your monthly expenses. Over time as your income increases your investment can also be increased through the step up feature. Mutual fund houses allow investors to top up their SIPs regularly. So, even if you start with Rs. 500 or Rs. 1,000 each month, you can increase your investment as time goes on.

3. The average Cost of a Rupee: Rupee cost averaging is when you purchase more units of a mutual fund when the Net Asset Value (NAV) is low and fewer units when the NAV is high. This takes your purchase costs and averages them out over the course of the investment period. You don’t need to worry about market timing when you invest through a SIP.

4. Convenience: SIP can be a convenient mode of investing. You may not have the time for extensive market research and analysis to adjust or balance your portfolio. So, once you have decided a good fund, you can give standing instructions to the bank and let the SIP take care of your monthly investments for you.

How to Start SIP Investment-

1. Complete your KYC Make sure you complete your KYC documentation with your fund house before you start investing. Identity proof, address proof and photograph are the usual documents required. These days, e-KYC is being accepted by most AMC's. The process can be completed online without having to visit the AMC office.

2. Set your investment goals Before investing in SIPs, you should first figure out what you want to achieve with your money. Every mutual fund is designed to help you reach a specific goal, so it's important to identify yours. Once you know your goals, you can look for funds that will help you achieve them.

3. Choose the SIP Select a fund and fill in the parameters for a Systematic Investment Plan (SIP). This includes information such as:

The length of your investment

Frequency of investments (monthly, quarterly, semi-annually, etc.)

The amount you want to invest

Fill in your details as regards to your goals and financial posture.

Where to Invest: SIP or Lump Sum

There are two ways mutual funds can be acquired: it’s either as a SIP or as a lump amount. A lump sum investment entails putting aside a specific amount of money at once for a mutual.

Which is better? Here are some points to consider:

1. Amount of money SIPs are a good investment option if you have a limited amount of money to invest. You can commence your investment with as low as Rs. 500 each month. It doesn’t matter whether you have Rs. 500 or Rs. 1,000 to invest each month – you can get started right away!

2. Experience Lump sum investments are when you invest all of your money at once. You have to be careful when you do this, because you could make a lot of money if the market goes up, but you could also lose a lot if it takes a downturn. This is a good strategy for experienced investors who have a lot of money to spare, but if you're new to investing, it's best to stick with instalments over time instead. That way, you minimise your risk and still get to grow your money.

3. Investment disciple Investment discipline is key to success in the long run. When you decide to invest a fixed amount of money each month, you can make sure that your investment progresses steadily and fulfils your investment goals. It may seem like a slow process, but when you look back after a while, you'll be glad you invested steadily over time. SIP investing can help you build a large corpus slowly and steadily.

4. Customize SIP Salary earners prefer their SIP investment to be conducted. In this case, salary earners can fulfill their commitment as they receive their paychecks monthly.

5. Frequency of SIP You can start your SIP at any time and at any interval (weekly, fortnightly, quarterly, or semi- annual) which implies. You can also embark on a futuristic investment without setting out a specific time of completion.

Perpetual SIP: You can simply move a fixed amount into the mutual fund on a regular basis for as long as you desire using this option. Instruct your bank to disburse your fund on a specific day towards your investment and it will be done seamlessly.

Step-up SIP: If you started your SIP investment with Rs.1000 monthly and you desire an increase of the same amount each year, you’ll first invest monthly, Rs.1000 and the second year Rs.2000.

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Small Steps, Big Returns

Consistent investing in the stock market can create lasting wealth. Start your investment journey now with mNivesh!

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Don't let an Accident derail your finances

Get the right coverage with Accident Insurance through mNivesh before the road surprises you.

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Everything you need to know about Fixed Deposit in India

If you're looking to invest some of your money in a Fixed Deposit in India but aren't sure how this works or what all the details are, don't worry. You're not alone. This article is a complete guide to Fixed Deposits in India for those who are curious about them or want to learn more about them. The intention of this article is only to educate you about how FDs work and give you a starting point so that you can do more research based on your own needs.

What exactly are Fixed Deposits?

A Fixed Deposit is a way of saving money where the investor agrees to keep his/her funds invested in the bank for a fixed period of time. During this period, the interest rate that the bank offers is generally higher than that of a regular savings account.

What are the types of Fixed Deposits?

There are two types of Fixed Deposits available in the Indian market:

1. Cumulative Fixed Deposit Schemes Investors of a Cumulative FD scheme benefit from compounding. On maturity, you will receive both the collected interest as well as the principal amount. The lender reinvests the interest money instead of delivering it to you on a regular basis. Thus, you will be earning interest on interest using it. For people who do not require regular dividends from their fixed deposit investments, a cumulative FD scheme is a viable option.

2. Non-Cumulative Fixed Deposit Schemes Non-cumulative Fixed Deposit schemes are recurring income plans that allow the investor to choose the time range for interest payments. Rather than reinvesting the accumulated interest amount, the lender delivers it to you in this case. The overall interest earned is much lower than Cumulative Fixed Deposits. This non-cumulative FD is a viable alternative for older persons and others who want to earn regular cash returns on their FD investment.

Pros and Cons of Fixed Deposit-

Pros:

Fixed Deposit is a secured way of investing with minimum risk.

A Fixed Deposit comes you a guaranteed income that is not affected by market fluctuations.

A Fixed Deposit has a set duration and allows for rollover.

You can utilize it as security in need and receive up to a limit of 90% of your investment as a cash advance.

You can also select the frequency of interest payments.

Cons:

Fixed Deposit is a type of debt instrument.Thus, less expected returns.

Earned Interest is taxable income.

Premature withdrawal incurs a fee from the lenders.

Taxable Income from Fixed Deposit in India-

While there is a lot of excitement and joy in investing, it is also important to keep track of the tax implications before making any investment. The interest received from Fixed Deposit in India is taxable.

Here is a breakdown of the Fixed Deposit income tax bracket.

FDs for Indian Residents: 10% Tax

FDs for NROs: 30% Tax + applicable surcharges & cess

However as an Indian Resident FD holder, TDS of 20% will be levied if you do not give PAN information. If your entire income from interest falls below the 10% tax bracket, you can claim back the deducted TDS. You can also provide Form 15G or 15H to your lender to declare that you do not fall into the tax bracket and no TDS needs to be deducted.

Conclusion

I hope this guide has helped in providing you with some of the basic information and tools required to invest your hard-earned money wisely. With foresight, planning, and a little bit of help along the way, you should be able to make informed decisions about how you store your money and what kind of interest rates you can expect to receive on your FD investments. To help you make further educated decisions, you can check FD Interest Rate Calculator Online and Fixed Deposit Interest Rates 2022 for free.

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Grow Wealth in the Stock Market

Turn your money into long-term wealth. Start investing in the stock market today via mNivesh to achieve your ultimate financial goals.