It’s taxing to keep a tab of the loans, credit card bills, and utility bills to pay these off timely and avoid incurring any additional charges.
Invest smart today for a better tomorrow
In simple terms, a Systematic Investment Plan, a.k.a. SIP is a mode of investment in mutual funds done on a regular basis in a systematic manner. This mode of investment is somewhat similar to a recurring deposit with a bank, in which you deposit a fixed amount of money in your RD account. However, the only difference is that your funds are installed in a mutual fund scheme instead of a bank deposit. Hence, your investment in SIP is subject to market risk.
SIP encourages regular saving habits in an investor and enforces a disciplined approach for investment in UAE. This investment instrument works on the simple rule of investing regularly in order to build your wealth in the long run. In SIP a fixed amount is deducted automatically from your account and invested in the scheme for a specified tenure on a daily, monthly or quarterly basis (as per your preference).
The following are the pros of investing in a SIP:
As an individual investor, SIPs allow you to make contributions towards your investment in UAE at regular intervals. This helps in reducing the burden of making a lump sum contribution at one go and makes your investment lighter on your income.
SIPs help in evening out the volatility of the market. It can be dangerous for both your health and wealth to time the market, which is why all you have to do is focus on the time in the market in your journey to build wealth by choosing the best mutual fund scheme. A SIP in a mutual fund that holds a steady record helps the investor to stay invested for a long term which helps in evening out the volatility of the market.
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SIPs encourage the habit of regular investing, this enables you to compound your funds that are invested. In the long run, SIPs can compound your funds better and in a systematic manner contrary to investing one lump sum, especially considering the volatility of the market.
Every investor has certain financial goals they wish to achieve it could be saving for a vacation, buying a house, saving for a child’s further education, etc. These goals can be achieved with proper and systematic financial planning. Many investors invest in the equity market as an option to meet their short term goals instead of seeking long term wealth creation for meeting their objectives. These goals can be achieved by investing in SIP, and the earlier you start to invest, the better.
Here are the top five plans for investment in UAE in SIPs:
SIP Provider | SIP Plan |
---|---|
Smart Savings Plan |
|
Emirates NBD |
Monthly Investment Plan |
Citibank |
Systematic Investment Plan |
ADCB |
Systematic Investment Plan |
HSBC |
Systematic Investment Plan |
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Not all mutual funds are the same. There is a ‘one size fits all’ approach for these funds. While one fund could be the right for an investor, the same could be unsuitable for another. There are various things that an investor needs to study before deciding on the mutual fund scheme to choose. Some of these things are:
The past performance of a fund is an important factor in analyzing that fund. However, it is not everything, as it may or may not sustain in the future and therefore should not be the sole basis for comparison between different investment options. It just indicates a fund's ability to clock returns across the conditions of the market. The likelihood of a fund with a good track record performing well in the future is higher than one that has not performed well. You must note the following while considering the performance of a fund:
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The performance of a fund is also dependent on the manager(s) of the fund. Therefore, it is vital for the manager to have sufficient experience in dealing with the movements of the market.
If you are looking at two funds that are similar to each other in most ways but the cost of one exceeds the other, only for marginally better performance.
In a Nutshell
The investor can develop healthy financial habits by SIP investment in UAE as they encourage regular contributions without putting a heavy burden on the income of the investor.
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