31 May 2020
Home / Business Productivity & Finance / Factors to Keep in Mind When Choosing SIPs

Factors to Keep in Mind When Choosing SIPs

FACTORS-TO-KEEP-IN-MIND-WHEN-CHOOSING-SIPS

According to a data report by Association of Mutual Funds in India (AMFI), the mutual funds industry added 9.24 lacs Systematic Investment Planning (SIP) accounts on an average each month during the FY 2019-20, with an average SIP size of about ₹2,900 per SIP account. That is quite a number! The industry body further noted that SIP continued to be the preferred route for retail investors to invest in a mutual fund as it helps them reduce market timing risk.

SIPs allow you to save little-by-little regularly, which gives you access to a more significant capital resource later in the hour of need. After all, little drops of water make a mighty ocean, right?

An SIP promotes financial security where you need to put in regular installments of money periodically (can be weekly, monthly or yearly) at a secure place. SIP also provides with the benefit of a hassle-free process, flexible investments, regularity in saving, rupee-cost averaging and compounding powers.

Read more, to know about the tips to follow in choosing the best SIP plan for mutual funds investments:

#1. Investment Goal

Usually, people invest with an objective. The time period to meet the goal might vary from a few months to years.

For instance, saving for a down-payment for a house can be considered as a short-term goal. While working out finances for children’s education and marriage, and one’s retirement would be a long-term goal. Think through your goals, and invest accordingly.

THINGS TO KEEP IN MIND WHEN CHOOSING SIPS

#2. Scheme Performance and Returns

The ultimate goal of any investment is returns. You should carefully look at returns given by the fund during different periods and compare them with the benchmark, usually an index, and other funds in the same category.

For equity mutual funds, you can check the long-term (three-five years) performance, while for debt funds you might consider to look at returns over the short to medium term

#3. Fund Type

Being acquainted with your risk appetite can also help you decide on the type of fund. If you are risk-averse and prefer a steady inflow of money, then you might consider choosing an SIP investment with debt funds.

While if you have the risk appetite to invest in the stock market for the long term, then you can select a SIP with equity mutual funds.

There are various other types of options available to choose from, namely, open-ended, close-ended, theme or sector-based, etc

#4. Fund House

When you invest in a mutual fund, you give a mandate to the fund house to manage the money on our behalf. It’s the decisions implemented by the fund house that might bring you closer to your goals and help secure your future.

Hence, looking for fund houses that have a long and consistent track record is very important.

#5. Entry/Exit Loads

This is the charge that you are liable to pay if you exit the mutual fund before a specified period. These small costs can have a significant impact on returns in the long run.

Different funds have different exit loads depending upon the nature of assets held by them.

Wrap Up – Choosing SIPs

You can use an SIP calculator to get an estimate on the amount that your mutual fund investments would value in the future after the end of the tenure. This will help you to plan your finances better. Happy investing!

Choosing SIPs
No votes yet.
Please wait...
Gaurav Jain
Article by Gaurav Jain
Hey There! My name is Gaurav Jain, a full time affiliate marketer since 2007. The reason for starting eMoneyIndeed.Com blog is to help you Save & Make Money Online. I write about Blogging, Online Marketing, Webhosting, SEO, Affiliate Marketing, Startups, Social Media, Email Marketing and more. Hope you enjoy the posts on eMoneyIndeed.com

Want To Earn Money Online?

Get Tips & Tricks in Your Mailbox
Subscribe Below
Join lot's of other subscribers:
Making money is a hobby that will complement any other hobbies you have. Stop wishing - Start doing. The goal is living life on your terms.
SUBSCRIBE

Check Also

5 Ways to Use Instagram to Promote Your E-Commerce Business

5 Ways to Use Instagram to Promote Your E-Commerce Business

Social media’s importance to businesses shouldn’t come as a surprise to any entrepreneur. With over …

Leave a Reply

Your email address will not be published. Required fields are marked *

Want To Earn Money Online?

Get Tips & Tricks in Your Mailbox
Subscribe Below
Join lot's of other subscribers:
Making money is a hobby that will complement any other hobbies you have. Stop wishing - Start doing. The goal is living life on your terms.
SUBSCRIBE
Want to Learn Tons of Ways to Make Extra Money From Home?
Show Me How

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join lot's of other subscribers
SUBSCRIBE