Investment is a much-planned and a thought-out process and is one that should be initiated only after complete preparation, taking into consideration the returns on that investment and then devising an informed plan as to how would the resources be allocated. Before you invest in your money, you need to invest a lot of patience and information in your decisions. Only then can you drive a strategy in which your idea yields better results. A potential investor should keep in mind his/her investment needs, age and the availability of the finances with respect to the inflation in the market and the future of that particular investment. The systematic investment plan or the SIPs is one such investment option that promises to give better returns on investment and needs treading the options every once in a while, especially in your early years. The systematic investment plan option should be gradually increased once every year in accordance with the rate of the inflation, your target goals on investment and your investment status meaning the amount that you can afford to put aside every year to be invested.
Need and the advantages of the SIP top up-: As the time progresses, the value of the currency also decreases. If you try and estimate the idea of the value depreciation of the currency, in last 20 years or so, the average inflation rate has been around 6% and is increasing ever since. So if you had, say 100 rupees some 10 years back then that amount would be equivalent to about 207 rupees to this date. Now, moving forward in the same sense let’s say that you have planned to save some 4 crore rupees for your future, then looking at the market a better suited target would be 4.70 because as the value of the currency is depreciating, the worth of the amount estimated today would not be the same as that of the one accumulated in next 10 or 15 years. So, the more you target today the better it is for you in the future. While, it may seem like a difficult target today to achieve, a higher target and a worthier goal is definitely going to protect against the adverse effects of inflation. One needs to make an informed estimate as to how much one expects to need in their future and then make the investment accordingly.
Intensifying your investments-: Many investors employ a step-up plan wherein the amount to be invested is increased over a regular interval of time and the amount too is increased. For instance, let’s say you make the first investment at a paltry 6000 in the beginning and start increasing it over a fixed interval of time, increasing it regularly every year by a mere 500. Then the amount that you would be investing after 10 years will become 11000. This increased amount will counter the inflation and the other factors that you might face in the future but cannot anticipate now.