The other day I met a Startup entrepreneur who was just talking about the importance of starting and that also starting big. As per him, a small game or investment had more chances of failure in comparison to playing big. I could understand being an entrepreneur myself that he is only thinking about launching big obviously with the backing of some deep pocketed private equity firm. But hey, I have also seen start ups who started small and made it big eventually slowly and steadily step by step.
Same is the case when it comes to investments. Should we start only when we have a big chunk sitting in our bank account or should we start small in systematic manner slowly accumulating our wealth. Let’s hear out some benefits of investing regularly rather than waiting to strike gold with the larger chunk of money.
1. Less fear of markets
If you are a regular investor who invest systematically, you don’t need to time the markets as your investments are going to the markets in regular manner without your need to monitor the timing. Sometimes the markets would be low and sometimes they would be high, hence averaging your investments.
2. Better Diversification
Rather than putting all your funds in one or two schemes you can start your SIP in a phased manner giving you time to check which strategy is working best for you. Despite having SIPs if you are checking your portfolio on daily basis and get hassled if the markets are volatile, it means that you have less risk appetite and should have less exposure towards equity.
3. Boon for people with irregular income
If your income comes in phases, there are chances that you already have plans for your money before it hits your bank account. If you keep waiting to accumulate that big chunk for your investments, that day might never come as you would always have your expenses lined up. It makes sense to start your investments even with a small amount as it will keep your savings habit up in the course.
4. Regular investments help you plan better
We all have financial goals and to achieve them we need to have certain amount of money by the goal date. These goals get achieved in a much better manner if we invest for them in a regular manner rather than investing irregularly. Consistent and Regular investments also help us check on where we stand with regards to our goals.
There are many options to build a house – some do it haphazardly and some take their time and build their house brick by brick paying attention to each and every detail. In the end, house built with proper care and planning lasts longer and serves purpose for the coming generations also. Similarly planned systematic investments done with the proper objective in mind takes care of financial goals and legacy planning as well. At least on One thing I agree with the entrepreneur friend of mine is – STARTING IS MORE IMPORTANT.
Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/