Investment at first seems or feels like a very heavy word that requires a whole lot of understanding to explore. However, the easier solution to the same comes in the form of SIP or Structured Investment Plans.
These SIPs have ingrained themselves as a fundamental component of traditional market investments, including stocks and mutual funds. These plans offer investors a straightforward approach to capitalize on market fluctuations while steadily nurturing their portfolios over the long haul.
However, are you aware that this very strategy can now be applied to your crypto investments as well? The question then arises: how can you extract profits from your crypto holdings and subsequently reinvest them?
What is SIP in Crypto?
Investing is a continuous process of saving and investing at regular intervals. When investing in Bitcoin, Ethereum, or any other crypto asset, the best method to invest is to invest as you do with any other asset (such as mutual funds or gold), regularly over a long period.
SIP in crypto works similar to how it does for traditional SIPs. It involves investments at regular intervals and the amount you want to invest depends on your investment capacity. Recently crypto exchanges like CoinDCX have introduced Crypto SIPs, that lets you invest in your favourite tokens at regular intervals. The day of the week can be chosen as per your wish.
Similar to how systematic investing works for mutual funds, all you have to do is add funds to your CoinDCX Wallet and choose the amount you want to invest in your desired coin. That is it!
How does Crypto SIP work in CoinDCX?
Start your Crypto Investment Plan in Bitcoin or our other available coins within minutes with these simple steps: (Time needed: 4 minutes)
Step 1: Open your CoinDCX Crypto App & Select “SIP” on your home screen
Step 2: Select the coin you want to start your SIP for
Step 3: Select your ‘Frequency & Day of SIP’
Step 4: Select the amount you want to invest on a weekly basis
Step 5: Click on “Start SIP”
That’s it! Enjoy your investing in bitcoin & more without regularly keeping tabs on the crypto market!
Note: Make sure you have funds in your wallet
Benefits of Crypto SIP
Simply put, CIP in Bitcoin & other crypto helps you invest with:
- Rupee-Cost Averaging: SIP lowers market volatility risk in the long-term period. When the markets are high, you buy less quantity of your crypto assets through SIP. When the markets are down, you buy more quantities for the same amount.
- Compounding: SIP installments smartly enable wealth creation over the long-term period. Your earnings are reinvested and you benefit from the power of compounding.
- Discipline: SIP installments are made at regular intervals, i.e. weekly on a predetermined day.
- Convenience: SIP is a hassle-free process as the amount is automatically debited from a fiat Wallet and invested in the scheme chosen by the investor.
- Flexibility: Investors can choose their preferred installment starting with an amount as low as INR 200 and can go upto INR 2000.
- No Lock-In Period: You can continue your SIP installments for as long as you like and cancel anytime as per your convenience.
Note: We will keep adding more and more new coins to SIP! Keep an eye out for your favorite coin if it’s not available already!
Read More: What is Rupee Cost Averaging in Crypto SIP?
Risk & Challenges
Though there are simple ways of investment that SIP paves the way for, it comes with its own set of risks. Though the risks are more of a crypto investment risks rather than purely based on SIPs. Some of them are as listed below:
- Volatility: Like any asset class, the crypto asset space is volatile in nature. Though SIPs help in investing with smaller amounts, the volatile aspect of the investment does not negate itself.
- Regulations: The value of crypto assets are also affected by regulations. Being a highly unregulated space, the developing revolutions can affect the prices and the returns.
- Limited availability: Though the crypto investment space has had a massive adoption, there is still a need for crypto SIP, having a wide variety of tokens to choose from.
Investment Strategy for Crypto SIP
Crypto SIP is one of a disciplined and methodical approach that one can look into while investing in crypto. This approach also mirrors the principles of traditional Systematic Investment Plans (SIPs) that is used in conventional financial markets. It is designed to help investors harness the immense potential of crypto while mitigating risks associated with their price volatility. Some of the strategies that one can look into are as mentioned below:
- Increase your investment over time: Opting to increase your investment amount in SIPs over time has a good potential to become beneficial in the long run.
- Avoid early withdrawals: Early withdrawals become a necessity sometimes to cover other expenses. However, it is important to remember that giving your SIPs time in the market is essential to earn via your SIPs. Given that it becomes an absolute last choice, withdrawing when the prices are high increases the chances to enjoy some profits.
- Regular tracking of your portfolio: Even though investing in SIPs negates your need to keep regular tabs on the crypto market, it still requires you to check your portfolio from time to time, in order to check how your portfolio is performing and also help you in deciding if you need a different strategy.
Learn More: How to Earn Passive Income in Crypto
Crypto SIP investments can be a valuable addition to your portfolio, offering exposure to the exciting world of crypto while maintaining a disciplined and systematic approach. By combining these principles with patience and perseverance, you can work toward achieving your financial goals and securing a brighter financial future.
In conclusion, crafting a sound investment strategy for Crypto SIP (Systematic Investment Plan) demands a careful blend of knowledge, discipline, and adaptability. The dynamic nature of the crypto market requires a proactive approach, one that combines long-term vision with short-term agility.
A limit order is a type of order where you decide a price limit or parameters for buying and selling crypto assets of your choice. Click here to read more.
CoinDCX App – As per the current crypto regulations, capital gains or profits on crypto will be taxed at 30% with an additional TDS tax of 1% on all trading transactions.