SIPs for Annual Expenses Works!

We’ve all heard of Goal Based Investing and SIPs as a way of achieving those goals over the long term. Well ofcourse that’s right, but there is another aspect to investing through SIPs that has been largely overlooked.

There are multiples of different categories of Mutual Funds which have their own suitability to different kind of objectives being tagged to them, in terms of the term available, priority of goal and individual risk profile. While most of us choose Equity Funds for long term targets and Balanced Funds for medium, we tend to ignore an entire class of Mutual Funds which not only provides the much-needed cushion to long or medium term portfolios but also is the best short-term goal instrument in the market right now. Debt might actually pay back more than your savings account or RD!

Most of us either keep funds idle in a savings account waiting for that annual premium to become due, or for the school fee payment time or any other similar once in a year expense. Some of us attempt to pay them from the income due to be received in the respective month or through credit cards. A lot of us also have these expenses falling in the last quarter because maybe that’s when we had earlier rushed to subscribe to the expenses to save on taxes as the month of March was approaching. Whatever the reason or the set of complexities from the above that may hold true for us, it does for some time cause a bit of turmoil in the otherwise smooth sail of a year.

But what if all this could be avoided with a tiny bit of modification in your plan. Simply divide the annual expenses by twelve and begin an SIP in the right Debt Mutual Fund. It really that simple. It will take care of all your annual expenses just like that. All you need to do is be ready to make small monthly contributions that will eventually payoff the larger annual expense and also fetch you a bit higher return than you would have made otherwise. Just select right fund. If you need us to talk you through, just send us your contact details in the form below and someone from Gravity Wealth Management will get in touch asap.

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