How Crypto SIP Can Help Investors Achieve Long-Term Goals

Given the volatile nature of cryptocurrencies, SIPs can help investors protect their funds from sudden market crashes.

Crypto SIPs can allow investors to choose their investment range as per their needs. ( Image Source :RODNAE Productions/Pexels )

Investors usually have different goals to achieve at various stages of their life. To achieve this, they start accumulating small amounts of wealth at regular intervals. Systematic investment plans (SIPs) have been the best tool for investors investing in stocks, equities, or mutual funds. Crypto being a more volatile asset than others, this disciplined approach can be a great way to tackle it. With more retail investors entering the crypto space, SIPs in crypto markets are rapidly gaining momentum. There are several benefits of investing in crypto via SIPs.

SIPs are flexible 

SIP can be a very convenient mode of investing. It can allow investors to choose their investment range as per their needs. 

With the help of this systematic plan, people can invest in smaller amounts rather than putting in a lump sum amount all at once. This can help investors not lose much of their hard-earned money if the market suddenly goes downward.

Based on the investor's risk appetite and experience, they can choose between SIP and lumpsum investments. But, for a novice investor, sticking to this investment plan can avoid unnecessary risks. Investors who want to discontinue their systematic plan can do that at any point of time during the investment cycle. 

There is always the flexibility that the amount of money being invested regularly can be increased or decreased depending on the investor's financial condition. It doesn't matter whether an investor has Rs 500 or Rs 1,000 to invest every month. 

Rupee-cost averaging 

SIP allows investors to enter the market at various points, which may result in buying less for more or buying more for less. This can help investors average the overall cost at which they buy an asset.

It can help in reducing the impact of volatility in the long term. Rupee-cost averaging is one of the most commonly used methods to survive sharp market movements. 

For newbies in the crypto market and risk-averse investors, SIP can help in averaging out the buying price in a better way comparatively.

Power of compounding 

Since the crypto market is highly volatile, investors can leverage the power of compounding through a SIP where returns are again reinvested. Over time, this results in a snowball effect which can increase the potential returns manifold.

The ideal way to maximise returns is to leverage the power of compounding by investing for an extended period. In order to experience the returns from compounding, investors need to invest for the long term. 

The more investing time, the more chances to earn from previous earnings. 

Disciplined investing 

SIPs allow investors to stay consistent with their investments. When people invest through SIP for the long term, investors tend to commit to saving regularly. 

Every installment the investor contributes is a step ahead towards achieving their financial goals. SIP mode can help investors earn a large corpus slowly and steadily. 

Withdrawals are easy 

One of the best SIP benefits is that investors does not need to wait for the money when they need it in an emergency. With just a few clicks, they can either withdraw a part of their investment or an entire investment that can be credited back to their source account easily. 

SIP in cryptocurrency can be great for long-term investors aiming for better risk-adjusted returns in a volatile market. It is a disciplined type of investment that also lets investors create a diversified portfolio. The best thing about these kinds of investments is that investors don't need to have to time the market or wait for the perfect opportunity to invest. Once they choose their fund to invest in, they can automate the processes to simplify the entire process. 

Small investments today at regular intervals can lead to a decent reward in the future. 

(The author is the CEO and co-founder of Mudrex, a global crypto investing company.)

Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.