<p>If you are looking to <a href="https://www.utimf.com/articles/how-to-invest-in-mutual-funds/">invest in mutual funds</a>, you may recall its standard disclaimer, “Mutual Fund investments are subject to market risks, read all scheme related documents carefully.” Different mutual funds invest in a basket of securities across asset classes, i.e., equity, debt, commodity, etc., and are exposed to certain investment risks. Although certain investment risks are invariable, one may mitigate some of them with a sound financial plan.</p>
<p>Market risk is one of the most common investment risks investors encounter while investing in equity schemes. Most often, investors tend to time the market as they feel investing at higher valuations or not making investments at lower valuations is considered to impact their investments. This is where the emotional bias comes into play, which generally influences the investing journey by delaying regular investments.</p>
<p>This is where <a href="https://www.utimf.com/invest-in-sip/">Systematic Investment Plans</a> (SIPs) come to the rescue of investors. With SIPs, one can make periodic investments in mutual funds irrespective of the market condition. SIP is a process for a disciplined investment of a certain on a pre-decided date in a specific <a href="https://www.utimf.com/mutual-fund-schemes/">mutual fund scheme</a>, regularly over a period of time.</p>
<p>SIPs benefit investors in terms of averaging the cost of investments over time. So, the investments made at higher valuations get averaged along with those made at lower valuations. Further, with regular investments, SIP helps investors to accumulate a healthy corpus over time.</p>
<p>SIPs help one automate mutual fund investing irrespective of market ups and downs. It initiates the automatic deduction of a specified amount periodically from the registered bank account and invests in the specified <a href="https://www.utimf.com/mutual-fund-schemes/">mutual fund scheme</a>. When the markets are down, investors benefit by acquiring higher units for the same SIP instalment. As the investing process is automated after the SIP registration, the emotional bias in investing due to market movements gets eliminated. This, systematic approach to your financial goals through SIPs may help in risk reduction and <a href="https://www.utimf.com/articles/wealth-creation-through-mutual-funds/">w… creation</a> in the long run.</p>
<p>SIP has been effective in steering through market volatility. No wonder retail investors prefer investing in markets through SIPs. As of October 2022, Indian Mutual Funds have currently about 5.93 crore (59.3 million) SIP accounts through which investors regularly invest in Indian Mutual Fund schemes. Source: <a href="https://www.amfiindia.com/mutual-fund">Association of Mutual Funds in India (AMFI)</a></p>
<p>While systematic risks, i.e., the risk of adverse market conditions, remain a risk in SIP, some of the overall investment risks are mitigated. Rupee cost averaging may work for investors in diverse and volatile market conditions, thus enabling them to stay on track with their investment journey.</p>
<p>Disclaimer:</p>
<p>Mutual Fund investments are subject to market risks, read all scheme related documents carefully.</p>