One of the best ways to invest in the stock market today is through a Systematic Investment Plan or an SIP. It requires you to make regular monthly contributions over a period of time, which is then invested in the stock market. An SIP helps you overcome market volatility in the long-run and enhances the returns that you get.
Talking about SIP, most investors tend to associate Systematic Investment Plans with mutual funds investment. However, that’s not the only investment that you can make through an SIP. In fact, you can also invest in individual stocks of companies of your choice through this unique investment method as well. Want to know more, continue reading to find out.
When you choose to invest in a particular stock of a company through a Systematic Investment Plan, such a method is referred to as ‘stock SIP’ or ‘Do-It-Yourself (DIY) stock SIP’. It allows you to purchase shares of a company at periodic intervals, just like a regular SIP.
Through a DIY stock SIP, you can choose to purchase a specific number of shares of the company or opt to base your purchases on the amount of investment that you make. Such kind of an SIP is the best option for long-term investors looking to invest in blue chip and fundamentally stable companies.
Opting for a DIY stock SIP comes with its own set of advantages. Here’s a quick look at a few of them.
1. It gives you complete freedom
A regular SIP where you invest in mutual funds investments does not give you the freedom to pick and choose the stocks that you wish to invest in. You will have to choose a mutual fund, which may or may not contain the stock that you wish to invest in. And even if it does, your entire fund will not be allocated to that particular stock or stocks.
With a DIY stock SIP, however, you get complete freedom to choose the stock that you wish to invest in and you get to allocate your entire contribution to that stock alone.
2. It allows you to invest in fundamentally good companies
Investing in blue chip or fundamentally strong companies may not always be financially favourable. This is usually because of their high share prices. As a matter of fact, the shares of some blue chip companies exceed Rs. 2,000 even. Such high prices may make it tough for you to purchase them outright through a lump sum investment.
With a DIY stock SIP, however, you will be able to purchase shares of such highly valued companies easily. For instance, by simply contributing Rs. 5,000 per month in an SIP, you can purchase 2 or more shares of blue chip companies each month.
In addition to these two benefits, you also get to lower your cost of investment by starting an SIP online. When the share price of your chosen stock is high, your SIP purchases fewer units and when it is low, your SIP purchases more units. When this is done for a long-period of time, rupee cost averaging kicks in and lowers your overall cost of investment.
Now that you know about DIY stock SIP, why don’t you go ahead and start an SIP online right away? Get in touch with Motilal Oswal to open a demat account instantly and get your stock market journey going.
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