Thanks so much for the detailed advise and suggestion..just one last information that I would request...in case I use Groww app as investment medium..how can I redeem my investment later in case the app is obsolete. I know that my investments...

Thanks so much for the detailed advise and suggestion..just one last information that I would request...in case I use Groww app as investment medium..how can I redeem my investment later in case the app is obsolete. I know that my investments would be registered with SEBI, AMFI and other regulated mutual funds authorities but redemption of the funds is something unclear to me..assuming that I would have invested in different SIPs like Kotak,SBI,HDFC etc...Thanks in advance!!

Ans: Redemption Process (Even Without Groww App):

Contact AMC (Asset Management Company) Directly: Each mutual fund you've invested in (Kotak, SBI, HDFC) has its own AMC. You can directly contact their customer care or visit their website to initiate redemption.

Offline Redemption: You can also submit a redemption request offline by filling out a physical form obtained from the AMC branch.

Another Platform: You can open an account with a MFD brokerage platform.

Things to Consider:

Exit Load: Check if your mutual funds have any exit loads (fees charged for redemption within a specific period).
Processing Time: The redemption process might take 3-4 business days for the funds to reflect in your bank account.
Remember, SEBI and AMFI ensure the safety and ease of transactions in your mutual fund investments, irrespective of the platform you use.

Ans: You’ve been manually investing Rs 5000 each in three mutual funds every month. While this approach is working for you, let’s evaluate the pros and cons of continuing this method versus using an automated Systematic Investment Plan (SIP).

Pros of Your Manual Investment Approach
Flexibility

By manually investing, you have complete control over the investment amount. You can decide when and how much to invest every month. This flexibility can be helpful during months when you might need more cash for other expenses.

Better Awareness

Since you are manually investing, you stay more aware of your portfolio’s performance. This involvement helps you stay updated on how the funds are doing and if you need to make any adjustments.

Avoiding Auto-Debit Issues

Manual investments give you the freedom to decide when you want to invest, avoiding any issues with auto-debits, such as insufficient bank balance or unplanned expenses that could disrupt your automatic SIP.

No Need for Commitment

In a manual approach, you are not locked into a specific SIP mandate. This gives you the liberty to skip a month without penalties or difficulties. You can even increase or decrease the amount without having to cancel and restart SIP mandates.

Cons of Your Manual Investment Approach
Lack of Discipline

Manual investing may lack the discipline and consistency of a SIP. Life can get busy, and you might miss investing in a particular month or forget to invest altogether. This irregularity can reduce your overall portfolio growth in the long term.

Market Timing Risk

Manual investments might cause you to unknowingly time the market. Some months you may invest during market highs, which might not yield the best returns. SIPs, on the other hand, benefit from rupee cost averaging, spreading out your investments across both highs and lows.

Effort and Time-Consuming

Investing manually every month requires effort. You need to log in, select funds, and make payments. Over time, this may become cumbersome, especially if your portfolio grows and you manage multiple funds.

Potential for Missed Investments

There could be months when you might forget or delay the investment due to unforeseen circumstances. This inconsistency can affect the overall growth of your wealth.

Benefits of Switching to SIP
Consistency and Discipline

SIPs enforce discipline in your investing. They are automated, ensuring that you invest every month without fail. This consistency over time can lead to compounding growth and better long-term results.

Rupee Cost Averaging

SIPs spread your investment over different market conditions. You buy more units when the market is down and fewer units when the market is high, averaging out your buying price over time. This method reduces the risk of timing the market.

Time-Saving

With SIPs, you save time. You do not need to log in and invest manually each month. The auto-debit feature ensures that your money is invested without your active involvement.

Compounding Benefits

SIPs allow your investments to grow steadily. The earlier and more consistently you invest, the higher the compounding benefits. Even small amounts invested regularly can create significant wealth over time.

Easy Adjustments

You can easily increase or decrease your SIP amounts based on your financial situation. SIPs offer flexibility without needing to manage every investment manually.

Drawbacks of SIPs Compared to Manual Investment
Lack of Flexibility

With SIPs, you lose some flexibility. Once you set up a SIP, it continues to debit the fixed amount. You might need to stop or adjust the SIP mandate if you want to change the amount or stop investing temporarily.

Auto-Debit Dependencies

SIPs depend on auto-debit from your bank account. If there are insufficient funds or bank-related issues, your SIP could fail, disrupting your investment flow.

Requires Commitment

SIPs require a bit more commitment. While you can stop or modify them anytime, they are meant to enforce regularity, which could feel restrictive to someone who prefers full control over their investments.

Impact on Your Portfolio Growth
Your manual investment approach is commendable, especially if you are consistent. However, the key to long-term wealth creation is discipline and compounding. SIPs offer both these benefits automatically, helping you stay invested regularly without the risk of skipping months.

For wealth creation, SIPs typically perform better due to the power of rupee cost averaging and consistency. Manual investing, on the other hand, requires more effort and discipline to achieve the same level of success.

Should You Continue Manually or Switch to SIP?
If you have the discipline to invest every month without fail and enjoy the flexibility, you can continue with the manual approach. It’s working well for you so far, and if you are confident in staying consistent, there’s no harm in continuing.

However, if you feel that manually investing every month may become cumbersome or you are at risk of missing some months, switching to SIPs would be the better option. SIPs ensure that your investments are on autopilot, giving you peace of mind that you are consistently growing your wealth.

Remember, the key to successful investing is regularity and time in the market, not timing the market. Both approaches have their merits, but SIPs are designed to offer better long-term benefits with less active effort.

Final Insights
Your current approach to manual investments reflects good financial awareness. However, automating the process through SIPs can enhance your consistency and save time. SIPs can also reduce the risk of missing out on market opportunities.

If you are confident in your discipline, you can continue manual investing. But for long-term wealth creation, a SIP is more structured and reliable. Both options can work, but automated SIPs give you the advantage of consistency and compounding without requiring active effort every month.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment