Systematic Investment Plans (SIPs) have already been gaining momentum among Indian investors for quite some time now. The idea of investing a small amount, but on a regular and dedicated basis is almost a surefire way to long term wealth creation.
No wonder then, the total number of SIP accounts in India for March 2022 stood at 5.28 crore. And miles away from the total amount raised through them, a record Rs 12,328 crore, according to data from the Association of Mutual Funds of India (AMFI).
For years, SIPs have been a solid way to counter ebbs, tides, wild price swings, and stock market volatilities. No wonder, it’s the investment avenue chosen by all investors who have a long-term vision of building a fortune, not just making small gains.
It seems like the people of this crypto wild west also seem to embrace this systematic and disciplined way of investing. For example, Tanmay Bhatnagar, who is a Data Scientist at Gamezop, is extremely bullish on crypto in general and invests in it through SIPs. But he laments that India has high taxation and ambiguous regulations for crypto.
Notably, the Union Budget 2022 announced the imposition of a 30% tax on any income generated from transactions on these Virtual Digital Assets (VDAs). Additionally, a 1% withholding tax (TDS) will also be charged, discouraging many investors.
“One of the most popular cryptocurrencies i.e. Polygon (MATIC) has Indian founders i.e. Jayant Kanani and Sandeep Nailwal. The untapped potential speaks of crypto in India for itself,” says Bhatnagar.
Many crypto enthusiasts also agree with Bhatnagar who believes that crypto SIPs have the power to penetrate the masses. Currently, CoinDCX, BitBns, Vauld, and a few other crypto platforms offer this capability.
Crypto SIPs can actually encourage even those who are currently resistant to investing in crypto or blindly follow market trends and half-baked recommendations from peers to make crypto investments.
“SIPs also help investors average out the large swings typically seen in the crypto world. Moreover, it will also get a very good response in Tier 2 and Tier 3 cities, as SIPs are usually micro ticket sizes, which makes it absolutely affordable,” said Khaleelulla Baig, Co-Founder and CEO of Koinbasket.
Laddered investments in crypto through SIPs instead of paying a lump sum directly have immense benefits. Not only does this allow you to take advantage of rupee cost averaging and achieve better market returns over time, but it also saves you from emotional and instinctive financial decisions that could potentially be loss-making.
“Crypto SIPs are a great tool to accelerate the mass adoption of crypto, the industry needs to come together and promote the concept of crypto SIPs such as the “Mutual Fund Sahi Hai” outreach program for phenomenal success. These SIPs must be in multi-currency crypto wallets and not in individual currencies.
Many companies allow you to start investing in crypto for as little as Rs 100. However, the idea is not entirely new in the dynamically changing world of crypto. One of the most fundamental ideas in crypto that is HODL-ing is just another version of taking a long-term investment view.
“In the Bitcoin market, HODL is an acronym for ‘Hang on for dear life’ and is a core philosophy that many BTC maximalists live by. For a hodler (i.e. an investor), short-term price fluctuations are insignificant while traders have defined levels of risk,” Darshan Bathija, CEO and co-founder of Vauld, pointed out.
The platform, which also offers AIPs or Automated Investment Plans (AIPs) for crypto, has seen encouraging growth. With a 164% increase in the number of people opting into these AIPs over the past six months, Vauld has also seen over 750 APIs created daily.
“Of these, 41% chose to continue their AIPs for a longer term, that is, more than 180 days,” he said.
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