SIP, or Systematic Investment Plan, is essentially a simplified form of the phrase “Rupee cost averaging,” It refers to the practice of investing a specific sum of money in Cryptos on a weekly, monthly, or quarterly basis.
The Rupee-cost averaging strategy helps reduce the risks involved with investing in volatile asset classes by distributing your investment over a long period, taking advantage of various market cycles, and lowering the investment cost. With this approach, regardless of the condition of the market, instead of investing a lump sum amount at a higher pricing point, you invest a small sum of money at several pricing points. It removes a lot of the speculation surrounding when to invest or not, as well as the emotional biases related to investment.
#1 You get higher flexibility.
SIP is often a highly practical way to invest. Investors are able to select their investment range based on their needs.
Instead of investing a large sum of money all at once, people can invest modest sums with the help of this systematic approach. If the market unexpectedly falls, investors may not lose as much of their hard-earned money thanks to this.
Based on the investor’s financial situation, there is always the option to increase or decrease the regular investment amount. Whether an investor has Rs. 500 or Rs. 1,000 to invest each month makes no difference.
#2 Rupee-cost averaging.
SIP enables investors to enter the market at different times, which may lead to buying more for less or less for more. This can help investors in averaging their entire asset acquisition costs.
In the long term, it may assist in lessening the effects of volatility. Rupee-cost averaging is one of the most frequently adopted strategies to withstand volatile market fluctuations.
#3 You can leverage the power of compounding.
Since the Crypto market is highly volatile, investors can leverage the power of compounding through a SIP, where returns can be reinvested. This creates a snowball effect over time, which multiplies the potential rewards.
Leveraging the power of compounding by making investments over an extended period is the best strategy to maximize returns. Investors must make long-term investments to benefit from compounding.
#4 You can be a disciplined investor.
Due to SIPs, investors can maintain consistency with their investments. Investors that use SIP to make long-term investments typically commit to saving money on a monthly basis.
Every installment the investor makes moves them closer to attaining their financial objectives. Investors that use SIP mode can slowly and steadily build up significant capital.
#5 You can withdraw anytime.
The fact that investors do not have to wait for the funds when they need them in an emergency is one of the significant benefits of SIPs. They can quickly withdraw all of their capital or just a portion with a few clicks, which can then be quickly credited back to their original account.
