1) Reduces Risk: Fixed investments every month in mutual funds makes volatility in the market irrelevant.
2) Disciplined Savings: It makes, one more disciplined in one's savings as one gets habituated to save & invest regularly.
3) Power of Compounding: The concept of compounding interest generates higher returns on investments.
4) Rupee Cost Averaging: SIP is an effective way of investing as rupee cost averaging lowers the risk of losses in the long run.
5) Income Tax Benefits: By investing in SIP-ELSS, one can avail tax benefit of upto a maximum of Rs.100,000/ under section 80 C. SIP-ELSS has the shortest lock-in period as compared to other tax-saving instruments.
6) Capital Gains Tax: Long-term capital gains earned on Mutual Funds/SIP are taxed at zero percent on holdings for a period of more than 12 months. The short-term capital gains are taxed at 15% on holdings for a period of less than 12 months.
7) Investing at early age: Investing in SIP at an early age makes your investments earn faster and become bigger as you grow.
8) Helps to fulfill one's Dreams: The investments we make are ultimately for some objectives such as to buy a house, children's education, marriage etc. and most of them require a huge one-time investment. As it would be difficult to raise such large amounts at short notice, one needs to build the corpus over a longer period of time, through small but regular investments. Small investments, over a period of time, result in large wealth and help fulfill our dreams & aspirations. This is what SIP is all about.
9) Do not put all your eggs in a single basket: Another advantage of investing through Mutual Funds is that even with small amounts one can enjoy the benefits of diversification. Huge amounts would be required for an individual to achieve the desired diversification, which would not be possible for most of the retail investors.
10) Transparent & Regulated: The Mutual Fund industry is well regulated by both SEBI and AMFI.