SIP or Systematic Investment Plan is not a new term for investors, but Cryptocurrency is relatively new. SIP is a facility offered to investors by several mutual funds. The facility enables investors to invest a certain amount, which is fixed, at regular pre-defined intervals. In India, one can start investing through SIP with an investment as low as Rs. 500. One can choose the intervals for pumping in the amount as per their convenience.
The benefit of SIP Over Regular Trading
The key benefit of investing through SIP is that the investor doesn’t have to worry about the market scenarios and the emotion of corporate investors. The rule of DCA of averaging plays out here, and it turns out to be a beneficial trade in the long run. Another key advantage is that one starts a SIP with as low as Rs. 500, which expands the reach of the market to a larger section.
What Works In Case of SIP?
SIP is the preferred way of trading for millions of people, who otherwise don’t have the capital to trade like retail traders. But despite the ups and lows in the market, SIP always turns out to be a profitable move. Why is it so?
The credit for this goes to the Power of Compounding. What stops a lot of people from trading is the lack of enough capital. The general perception is that even if a person starts investing with Rs.1,000, the total profit will hardly cross a few lakhs, and that too after several decades. Common people ignore the power of compounding, which is one of the most important lessons in trading.
Power of Compounding
You get huge profits in the long term when you continue to invest a fixed amount of money over regular intervals without caring about short-term profits or gains. Another benefit is that you have to invest a minimum amount which doesn’t affect your monthly budget. It’s like putting your savings to work to make more money.
SIP also lets investors early with a very low amount. The earlier you start, the bigger is the profit.
Top-Up SIP
Top-Up SIP is a type of SIP where the investor can increase the number of SIP installments at regular intervals as their income increases. This is a great way to manage your earnings and expenditure to make a fortune. For all those who dream of retiring early, this is the way.
Also Read, Ethereum? The Largest Competitor to BitCoin
SIP in Cryptocurrency
Now, cryptocurrency is a very lucrative market. However, it still has to cover a lot of ground to compete with the share market. Cryptocurrency has over 1 crore investors in India. Still, with business leaders, investors, and influencers creating awareness about the market, the crypto market is bound to grow.
A key reason behind many investors shying away from pumping money into digital currencies was the lack of funds. Addressing this problem, several crypto exchanges have introduced the SIP facility to compete with the share market. For first-time investors who are still not 100% sure about the future of cryptocurrencies, SIP could be a great way to start investing.
Another key reason that makes SIP in crypto more lucrative is higher returns. The cryptocurrency market has seen several crashes in its limited lifespan. Still, it hasn’t stopped it from growing manifold, pushing the overall valuation to trillions.
Should you invest in Cryptocurrencies via SIP?
A lot of businesses have tied up with several blockchain firms. A lot of countries have legalized crypto and are developing their own digital currencies as well. This is a clear indication of the future of crypto. The valuation of the crypto market 10 years from now will grow at an unprecedented rate, looking at the growth in the past five years.
If you are in your 20’s or 30’s or even 40’s and don’t want to have just one source of income, now is the time to catch the bus. Like any other market, starting early is the key here. SIP could be the way you have been looking for all along.
How to Invest in Cryptocurrency Through SIP?
Step 1: Sign Up with any trusted Crypto Exchange. If you already have an account, focus on the 2nd step.
Step 2: Complete the KYC process and select the cryptocurrency you want to invest in.
Step 3: Select the interval at which you want to pump funds, i.e., weekly, monthly. You are good to go.
Different exchanges have different user interfaces. Hence, you need to be well versed with the options available on a particular exchange before starting a SIP.
