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Sarwa is an investment advisory platform that helps you put your money to work and reach your life goals. We launched a series of articles to help you on your financial journey, and for you to learn more about smart investing.

To invest effectively, you need a plan. One of the best plans to follow is a systematic investment plan (SIP) and we’re going to tell you about the benefits today.

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As we all know, forming a habit is hard. That’s true of exercise, starting a diet, even the way that you save and invest money. As aviation pioneer, Antoine de Saint-Exupéry, famously said: “A goal without a plan is just a wish.”

And that’s true of investing. If you don’t make a plan that sets out how and when you’re going to invest, you’ll struggle to hit your financial goals. One of the most effective ways to invest successfully is a systematic investment plan (SIP) and we’re going to tell you the benefits.

What is a systematic investment plan (SIP)?

A Systematic Investment Plan (SIP) is a financial planning tool that helps you to create wealth by investing small sums of money on a regular occurrence.

Typically, investors set up a system that regularly allocates money into ETFs. The key is that the amount invested each time is the same and the date when the investment is made (say, the 1st of every month) is non-negotiable and must be met.

The beauty of a SIP is that it helps to stagger investments into ETFs. Thus, the investment gains from the benefits of dollar cost averaging. It’s a method that all investors can benefit from, regardless of their expertise.

What are the benefits of an SIP?

There are many benefits to consider when assessing whether a SIP is the right investment method for you. These include:

As we know, the stock market can go up and down. Dollar cost averaging lessens the impact of these swings by putting your money into the market in chunks on a scheduled basis. SIPs benefit from this by regularly committing money to the stock market over time. You can read more about the huge benefits of dollar cost averaging here.

  • You forget about investing.

Thanks to dollar cost averaging, once you’ve set up a SIP and you’re regularly investing money into the market, you don’t have to worry about the financial world. Sure, it pays to keep up to date with news and investment intel, but your money won’t be affected as you’ll always get the average price. So you don’t have to worry about global markets.

  • You don’t need any expertise.

One of the best parts of a SIP is that once set up, the process is automated. So all you have to do is sit back and watch your investments grow, safe in the knowledge that the regular contributions are being invested in a disciplined manner. You need no expertise in order to begin a SIP. You just need to make a plan and stick to it.

The key things to remember

When thinking about setting up a SIP, there are 3 rules to remember that will get you started:

  • Start now.

The more money you set aside, the more can be positively impacted by the power of compound interest. So start regular contributions as soon as you can.

  • Start with whatever you have.

There is no amount too small that can be allocated to your SIP. As long as you are regular with the amount you’re contributing, it will grow into a large amount over time.

  • Stick to your plan.

The trick with a SIP is to remain disciplined. If you consider your regular contribution non-negotiable, your investments will soon grow.

How Sarwa can help

Sarwa is here to help you to set up a SIP.

If you’re already a Sarwa account holder, all you need to do is to make regular – we recommend monthly – deposits into your account. Let’s say on the 1st of each month, you transfer $500 to Sarwa. This $500 is invested for you. Over time, as the months roll by, this builds into a sizable investment pot.  

A systematic investment plan is a great way to easily build your investments. If you’d like to talk to a financial advisor about your own personal plan, get in touch.


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Important Disclosure:

The information provided in this blog is for general informational purposes only. It should not be considered as a personalized investment advice as this might not be suitable for everyone. Each investor should do their due diligence before making any decision that may impact his/her financial situation and should have an investment strategy that reflects his risk profile and goals. All investing is subject to risk, including the possible loss of the money invested. Examples provided are for illustrative purposes. Past performance does not guarantee future results. Data shared from third parties is obtained from what are considered reliable sources however cannot be guaranteed.

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