Why Are Mutual Funds The Best Way To Plan For Your Future?

Investing in mutual funds, especially through systematic investment plans, allows for very disciplined, long-term investments that give better return on investments than other investment options.

Most people invest with the intention of saving for the future. The number of people who invest simply because they have surplus cash that is just lying around is few and far between. Everyone has some kind of a future need – the higher education cost for a child, the wedding expenses for another, an emergency fund, or a retirement nest egg. Sure, there are other options in the market that are promoted for these very same goals. Insurance companies have education and retirement policies, for example. However, investing in mutual funds gives a much better return on investment than in other options. This makes it easier for people to achieve their future financial requirements – your money is simply way more productive when invested through mutual funds than through other bank or insurance products.

Within mutual fund plans, Systematic Investment Plans (SIPs) are the best way to save for the future. Systematic plans require a monthly commitment of funds – however small or large that may be. This leads to an extremely disciplined plan of investment. Regular investments should be the go-to method when saving for the future. The compounding effects of SIPs are also very significant, leading to substantial return on investment. Moreover, because you are consistently investing in the market, irrespective of how the market is performing, you would end up investing both when the market is good and when the market is not performing well. This leads to an effect referred to as Rupee Cost Averaging – basically, the average cost of your investment comes down. Moreover, after systematically investing for a period of 5 years or so, when you sell, the overall market would be better than when you started investing so you will redeem your investment always at a higher price and you get more value for your money! Wealth Central has found that SIPs are the strongest investment method out there – especially if you are a salaried professional. The more consistent your pay check, the more consistent your investment has to be!