Invest in SIP – Smart tips that you should know

Anyone who wishes to build a wealth corpus should ideally go for SIP investments. The popularity of investing in the SIP’s has witnessed remarkable growth.

Even today, some investors still think that SIP is a product. However, it is to clearly understand that SIP is simply no synonym for a scheme of the mutual fund.

What is a SIP?

SIP stands for Systematic Investment Planning and is only an investment tool that helps an individual to invest regularly in any of the performing mutual fund schemes

In the simplest words, SIP investment is one of the prime ways of investing hard-earned money in mutual funds. One can also invest through a lump sum or a one-time payment. To understand the amount that one should look forward to investing in SIP and achieve the financial goals one may use the SIP calculator online. One can invest with a small amount that will help them to reap bumper returns. SIP investment also brings in financial discipline and one can easily keep a track of the investments made easily.

What are the Best Ways to Invest in a SIP?

Investing ina SIP is not complicated at all, however, one needs to have a good understanding of the financial market. Besides, in case of any issue or confusion, one should get in touch with a financial expert as well.

Gaining knowledge about anything is of no harm. One should go for SIP investments only after he has an understanding of the market. Listed below are some ways that should help an individual who is looking forward to investing in SIP:

  • Invest small amounts constantly
  • Choose the auto-debit option for the payment
  • Have patience and do not take stress in regards to ups and downs of the market performance
  • Plan the budget and the expenses accordingly

What are the SIP benefits?

When it comes to investing in the SIP’s it does has its advantages. Listed below are some of the key SIP benefits:

  • Disciplined Savings: Well, the common complaint of most people is that they are not able to save much money. The truth remains you spend even more when you are earning more because likewise the expenses also rise. Therefore, it becomes important that one saves first and then only spend. SIP investments inculcate the sense of disciplined savings every month, which is invested before you spend.
  • Effect of Compounding: So, when a SIP investment is made monthly it gives returns. Now, these returns are then added to the actual investment sum and likewise, it is invested again. With the passing time, the SIP investment and it returns at policybazaar are subject to the effect of compounding, which grows exponentially.
  • Invest With Little: When it is about SIP investments one can start with the minimum amount of Rs 500 every month. Assumingly, let’s just say that the savings are not big even the one can benefit the growth that is being experienced and invest in the mutual funds accordingly.
  • Keep Emotions Away:For the time being, the market sectors vacillate extensively. Seeing such good and bad times, you may want to make rash buys or deals. This is typically not a smart thought. You ought to make investments for an extensive stretch. When investing in SIP plans, you follow a trained way to deal with investing. Because of the standard propensity for putting investments into a SIP plan, you keep yourself from responding to transient instability.
  • Skip SIP Payment:There could be a time when one would not have enough money in the bank account to make the payment for the SIP investment for a certain month. At such a time, the individual can continue with the payment in the coming month without facing any sort of hassles. Moreover, one need not pay any fine or penalty for the same. When it comes to a recurring deposit a fine is levied for the same.
  • Stop SIP When You Want:It is possible that at some point in time one might decide to stop a SIP investment. In case one is looking forward to doing it then one simply needs to opt-out from the SIP and no fine will be levied. Once the SIP investment is stopped even then one can opt to get back the sum or maybe let it continue and accordingly the investment is done in the mutual fund.

Smart Tips to Know For SIP Investment

If one wishes to get bumper returns from the SIP investment then follow the listed below smart tips:

  • Long-term Objectives: When it is about a SIP it works best in the volatile market as the SIP benefit is around rupee cost averaging. In the case of a short-term the market most likely does not experience all the cycles. One would end up purchasing more mutual funds units specifically when the market is high mostly. In case, one exists from such a case then good returns will not be benefitted. Therefore, make sure that enough time is given to the SIP investments.
  • Look for Long-term Performing Funds: While opting for a mutual fund, individuals do look at the previous record of the mutual funds. In case one does not it is suggested to look at the performance of the fund. However, this does not mean that a record of the past year only needs to be seen. Mostly, there are chances that the mutual fund in the previous year would have a history of under-performance. Therefore, opt for a mutual fund on the premise of a minimum of 4-5 years of the performance of it. Choosing such funds will give you a clear picture in regards to the stability of the fund so that it can give bumper returns even in a difficult market.
  • Review the Funds: The funds need to be reviewed every six months. This will help an investor to contemplate the current performance of the funds and likewise decide if the fund is not responding as expected. If there is a constant dip in the performance of the fund then it is better opt-out from the scheme and likewise, invests in other performing funds. However, a little patience is required.
  • Diversify the Portfolio: It is always a good thought of diversifying the investment portfolio. Instead of putting all your hard-money in one specific mutual find try to split into different funds and accordingly keep a track of it. This will be helpful in case when one fund is even not performing one can still count on the others. The smart thing in today’s times is to think in multiple directions and have a diversified strategy.
  • Never Exit in the Downturn:In case one wishes to stop the SIP investment, the ideal to do so is when the market is higher relatively. Therefore, even before you think to stop the SIP investment it is advisable to figure out the apt time to stop the investment. There are high chances that one may not be able to obtain bumper returns if the SIP investment is stopped midway specifically when the market tanks.

The Bottom Line

Indeed, it is not surprising at all that today individuals have been opting for the SIP as it protects you from many of the harms. SIP investments are one of the safest, opulent, and convenient ways if invest in the equity mutual funds in Indian equity markets.

Avail the SIP benefits and invest in the mutual funds effectively. The SIP investments will help one to make logical financial decisions and not going forward with greedy impulses. While making a SIP investment it is better to know what one is wanting from the investment.

Follow and Subscribe Nyasa TV :

Sharing is caring!

Follow us in Twitter
2 Comments
newest
oldest most voted
Inline Feedbacks
View all comments
Mannequin 2
10 months ago

K500 investment? I will try this SIP thing. Today.

Moneybags
Moneybags
10 months ago
Reply to  Mannequin 2

Me thinks this SIP stuff is ok in economies which have a more vibrant money / stock market.

shares
Read previous post:
Chakwera hints on vying for second term as Malawi president

President Lazarus Chakwera has dropped a hint that  he would vie for a second term in office and  not be...

Close