SIP is preferred method for mutual fund investment among youth: Here’s Why

Mutual Fund SIP: Mutual funds have seen an inflow of over Rs 12,000 crore in the past four months. A large number of new investors are enrolling for the systematic investment plan (SIP) to generate long-term wealth with monthly flow in the mutual fund industry.

According to latest data by Association of Mutual Funds in India (AMFI), mutual funds have seen an inflow of all time high of Rs 12,693 crore through SIP route. 

Moreover, SIP is a great way for people to keep saving as a habit - this is especially important for millennials and GenZ who find it difficult to save money.

Why are youth investing in mutual funds through SIP?

Youth today between the age of 19-30 prefer mutual funds through SIP as a preferred investment option. 

Lavkush Singh, 22, when asked why he prefers to invest in mutual funds through SIP, said, “Investment in mutual funds through SIP is an easy and sufficient form of investment method for me as a beginner. It doesn't take a toll on my income as it is a monthly payment system nor does it involve high risks as an investment. The monthly payment helps to build savings over regular intervals. It's a steady form of investment that gradually helps the growth of my savings and as it is handled by experts, it provides a sense of guarantee and easiness.”

Youth think mutual funds through SIP is a safe and reliable option, “Mutual funds through SIP is a great way to invest as it is safe in the long-term and is reliable,” said 29-year-old Meghna Tiwari.

For some SIP is a disciplined method of investing, “I invest in mutual funds through SIP as I do not have the time nor the expertise to choose the right stocks and SIP helps me to invest in a disciplined and consistent manner,” said 22-year-old Nelson Mathais. 

What is SIP?
A Systematic Investment Plan (SIP), more popularly known as SIP, is a facility offered by mutual funds to the investors to invest in a disciplined manner. SIP facility allows an investor to invest a fixed amount of money at predefined intervals in the selected mutual fund scheme. The fixed amount of money can be as low as Rs. 500, while the pre-defined SIP intervals can be on weekly/monthly/quarterly/semi-annually or annual basis. By taking the SIP route to investments, the investor invests in a time-bound manner without worrying about the market dynamics and stands to benefit in the long-term due to average costing and power of compounding.