Calculate Your SIP Returns Before You Jump Into the IPO Grey Market Craze
The IPO grey market enables investors to generate substantial profits through all investments in initial public offerings before they are officially introduced and listed on the stock market. However, before riding the wave of the IPO grey market investment, investors must understand the benefits of systematic investment plans. Though a more traditional form of investment, SIP can serve as a more reliable and effective method that investors must select over IPO grey market investment. Discipline long-term investment of a constant amount in mutual funds under a systematic investment plan can help investors understand its benefits and receive the maximum benefits.
The following article explores the returns from systematic investment plans and how investors can use the same for their financial goals.
IPO grey market investment
Investors must first understand the risk behind IPO grey market investment. Being an unofficial platform, IPO grey market offers access to an unregulated market to make investment in initial public offers before they are listed on the stock exchange. However, this procedure of investment into the IPO grey market is unregulated and can pose a certain risk that investors must avoid at all times.
Systematic Investment Plan calculation
An SIP calculator makes calculation of the correct total returns from SIP easy and accurate. Being an effective method of investment, SIPs deliver twin benefits of rupee cost averaging and compounding. Moreover, the overall market of systematic investment plans is completely regulated, transparent, and free from any kind of volatility.
Understanding the calculation of Systematic Investment Plans
Consider a monthly investment of ₹5000. The SIP amount is invested for 10 years delivering an average return of 12% per annum. Through systematic investment plans and investment of the selected SIP amount can deliver returns of more than ₹5.6 lakh. With an investment of a total of ₹6,00,000, Investors can generate exponential profits that are more reliable when compared with IPO grey market investments.
The level of risk associated with investment through a SIP is low when compared with IPO grey market investment. Investors even generate long-term consistent returns that are more dependable. All the investments are regulated by SEBI making SIPs a more preferred method of investment.
Selection of SIP over IPO grey market
Though the returns from the IPO grey market can be quite higher when compared with systematic investment plans, the returns are not fixed and can even lead to losses as well. System Investment plans on the other hand deliver consistent returns over a long period which can help risk-averse investors. With the use of a SIP calculator, investors can even compare the returns from systematic investment plans and IPO grey market investments.
Conclusion
With disciplined and consistent investment over a long term in a selected mutual fund, investors can take the benefit of systematic investment plans. Though elevated returns from IPO grey market investment can attract investor attention, informed decision making through SIP is essential. With careful selection of the right mutual fund and systematic investment plans, investors can build a great amount of wealth which IPO grey market investment may not be able to deliver.
