SIP: Do You Need An Advisor Or Should You Invest Directly?
Not sure if you should invest in mutual fund SIPs directly or invest based on advice from a financial advisor? This blog will help you understand the pros and cons of both approaches. Also, learn how the Cube Wealth app brings the best solutions whether you are a DIY investor or need a financial advisor.
A Systematic Investment Plan (SIP) is one of the two ways of investing in mutual funds. When you invest a sum of money once it is called Lumpsum.
When you invest small amounts of money periodically to eventually build a large corpus of money in the future - it is called a SIP. As easy as this may sound, you still need to invest in the right mutual fund SIPs to create sustainable wealth.
To do this, you may have to choose between getting an advisor or investing on your own. There is also a third way to invest that we will talk about towards the end of this blog.
But first, let's understand the merits of SIPs and the role of an advisor when you are investing in a mutual fund via SIPs.
Benefits Of Investing In SIP Mutual Funds
1. Affordable
SIPs can help you get the best of mutual fund investments in an affordable manner. You can start a monthly mutual fund SIP for as low as ₹1,000 on an app like Cube Wealth.
2. Passive Income
A mutual fund SIP generates passive income for you which means the money you invest earns interest. Even the interest your SIPs generate will earn interest! This is known as the power of compounding*.
A SIP works for you while you sleep which means it generates passi
A Systematic Investment Plan (SIP) is one of the two ways of investing in mutual funds. When you invest a sum of money once it is called Lumpsum.
When you invest small amounts of money periodically to eventually build a large corpus of money in the future - it is called a SIP. As easy as this may sound, you still need to invest in the right mutual fund SIPs to create sustainable wealth.
To do this, you may have to choose between getting an advisor or investing on your own. There is also a third way to invest that we will talk about towards the end of this blog.
But first, let's understand the merits of SIPs and the role of an advisor when you are investing in a mutual fund via SIPs.
Benefits Of Investing In SIP Mutual Funds
1. Affordable
SIPs can help you get the best of mutual fund investments in an affordable manner. You can start a monthly mutual fund SIP for as low as ₹1,000 on an app like Cube Wealth.
2. Passive Income
A mutual fund SIP generates passive income for you which means the money you invest earns interest. Even the interest your SIPs generate will earn interest! This is known as the power of compounding*.
A SIP works for you while you sleep which means it generates passive income. As Warren Buffet said 'Make money while you sleep’. That's exactly what a SIP does for you.
Mutual fund SIPs have the potential to generate lucrative returns over the long term. That is, after all, the goal of any investment at the end of the day.
Moreover, mutual funds are divided into various categories each of which has its own strengths and potential to generate potentially high returns.
Investing a small sum of money monthly or quarterly in a diverse set of mutual fund SIPs can help you maximize your profits and minimize the risks.
However, it is crucial to invest in the right mutual fund SIP. 'Right’ here means it is:
Suitable for your goals
In-line with your risk profile
Capable of generating reasonable returns
One might assume that it is easy to simply identify goals and choose a mutual fund SIP that fits it. But that may not always be the case. There's always the risk of:
Over diversifying: having too many (bad) mutual fund SIPs
Under diversifying: less than optimal number of mutual fund SIPs
Not buying the right mutual fund at the right time
Holding on to underperforming mutual funds
You may be able to avoid these risks if:
You have a trusted mutual fund advisor by your side
You have time to research every mutual fund (1000+) every day
Option #2 may not be feasible for working professionals because they work from 9 to 5 every day, 5 or 6 days a week. But even if you do have time, an app like Cube gives you access to recommendations from a trusted advisor like Wealth First to help you invest better.
Wealth First has more than 2 decades of experience in the market and a track record of beating the market by ~50% since 2010. There are two benefits to this:
They'll help you choose mutual funds based on your goals
They'll give you selling advice in case a mutual fund underperforms
Difference Between Investing Directly Vs With An Advisor
Investing Directly
Investing With Advice
Exposure to multiple scheme options
Curated list of mutual funds
Low fees
Advisory fees
Master of your own destiny
Align with advisor's strategy
Extensive time & research
Advisor does the research
Risk of not being objective
Objective advice based on data
Holding on to bad mutual funds
Clear selling advice
Tough learning curve
Sit back and relax
At the end of the day, you must choose a method that suits your investment goals and needs. There's no reason to shun one method for another but a good investor uses all tools available to them.
An app like Cube Wealth gives you access to a combination of investment advisory and DIY. This approach may solve the dilemma and in turn, give you the best investment experience.
How To Invest In SIP Mutual Funds?
The Cube Wealth app simplifies the SIP investment process by giving you access to 2 important features:
1. QuickSIP
QuickSIP helps you invest in SIPs that work for you. To start with, you need to take a detailed risk analysis quiz that can help determine your risk profile and investment goals.
After that, you get access to a curated list of mutual funds from Wealth First, Cube's mutual fund advisory partner, across categories like international funds, equity funds, debt funds, liquid funds, and more.
You have full control throughout the journey and once you've invested, you can sit back, relax, and think long term. Wealth First will give you clear instructions on when to sell if the need arises.
It may so happen that you've started a SIP but now you want to change the SIP date or snooze a payment. Cube has an option for that as well.
SuperSIP is a feature (only available on Cube Wealth) that allows you to snooze a mutual fund SIP payment in case you don't have the required amount.
You can use SuperSIP to increase or decrease your SIP amount or change the SIP date. SuperSIP ensures that investing in mutual funds is affordable and flexible.
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