Why Invest in ETFs Through SIPs?
5paisa Research Team
Last Updated: 27 Jan, 2025 04:10 PM IST
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Content
- 1. Ease of Entry with Smaller Investments
- 2. Benefit from Rupee Cost Averaging
- 3. Diversification on a Budget
- 4. Lower Expense Ratios and Better Cost Efficiency
- 5. Liquidity and Flexibility
- 6. Automated Investing and Discipline
- 7. Compounding Gains Over Time
- 8. Ideal for New Investors
- Conclusion
Investing in Exchange-Traded Funds (ETFs) through Systematic Investment Plans (SIPs) combines the best of two worlds: the diversification and cost efficiency of ETFs with the disciplined, gradual approach of SIPs. This strategy allows investors to face market volatility, benefit from rupee cost averaging, and build wealth over time without needing to time the market.
In this article, we’ll explore the advantages of ETF SIPs and help you understand why investing in ETFs Through SIPs is a viable option for both new and seasoned investors.
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Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.
Frequently Asked Questions
Not all brokers offer SIPs specifically for ETFs, but many do. It’s best to check with your brokerage platform to confirm if they support SIPs for the ETFs you’re interested in.
The ETF itself may have a small expense ratio, but unlike mutual fund SIPs, ETF SIPs usually don’t have entry or exit loads. You may, however, have to pay brokerage fees when buying or selling.
Investing in ETFs through SIPs is relatively safe, especially if you choose ETFs that track broad market indices. However, like any investment, there are risks involved, particularly with ETFs that track volatile sectors or assets.
There’s no right or wrong amount. It depends on your financial goals, budget, and risk tolerance. You can start with as little as ₹500 in some cases, but a larger amount can help you achieve your goals faster.
Yes, ETFs through SIPs are ideal for long-term goals, especially if they track stable indices. The compounding effect and rupee cost averaging can help maximize your returns over the long run.