SPI is a great thing we have in the financial world. Only recently I understood the real significance of an SIP and the potential of the same. About 5 years back I started an SIP and contributed monthly to it. I guess I would have contributed continuously for about 20 months. After 20 months there was a problem. The brokerage company said that I cannot transfer the funds from my equity account but instead I have to do it from my bank account.
This is where I made the mistake. They asked me to complete the procedure for ECS and they were continuously calling me and providing several options to complete the ECS. I thought it was not the priority thing and I did not give enough focus to that task. Finally, they got bored and they stopped calling me and I also started focusing on my other things. But the amount that I had invested for 20 months was around 40,000 INR and today it is more than double and keeps growing every month.
I feel very sorry about this because contributing every month to something like this was not a big problem for me at all. I can say that I was careless to miss such a golden opportunity. The market was very good in the last 5 years and it pumped like anything. That's one of the primary reasons why my Mutual funds also had a great value. Today I feel like I should see if I can contribute to that SIP again so that I don't have a regret story similar to this after a few years.
The power of compounding is amazing. I have seen several videos on that and only during the initial days it will be tough after the value of our assets becomes big, then the compounding becomes magic and if we don't take any of the funds out, the value will keep increasing and one fine day when we look at it, it will be an incredible value. I see this happening to some of my shares and mutual funds.
DCA or RCA
This is the most important thing that happens in an SIP. When the price of something goes down or goes up, we can average our investment whether it is Dollar cost averaging or Rupee cost averaging, it ends up being a great thing increasing the value of our investment at all seasons of the market.
SIP also cultivates the habit of disciplined savings. If we have the money in our bank account, we keep getting one expense or the other. But if we keep the money fully planned like once it reaches the bank account we have a good plan to be executed. Something like an SIP, then we will have a great discipline and we will be able to see the amount growing in the years to come.
For some people, SIP is not a burden. They plan very simply and gradually increase the value and reap the profits. Imagine making a bigger investment at the start itself. It can be hard to continue in the long run.
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Disciplined saving is something that everyone should learn from SIP.
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I’m just learning about SPI for the first time in my life though
Sounds like an amazing topic
Can you please help us with the full meaning of SPI?
Also, I noticed that you wrote SPI at the beginning of your text but at the middle, it was SIP…
You can google SIP. Systematic Investment Plan.
Didn't fully get what SIP is, I'm guessing it's a mutual fund plan, nevertheless compounding savings has a lot of benefits in the long run, it's a wealth producing asset and I'm glad you saw a little profit regardless of the missed opportunity. Not really into mutual funds though, watched numerous Robert kiyosaki's videos nevertheless I believe all depends on what you like to be in your portfolio.
SIP also cultivates the habit of disciplined savings.-- this is no doubt a great attribute of SIP, savings is an integral part of building financial freedom and with SIP one can culminate the habit of saving one's income in a disciplined manner.
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I have come to learn a lot from sip and one of it is the discipline saving