Systematic Investment Plans (SIPs) are considered one of the most significant long-term investment options. Through this avenue you can invest a fixed amount in a mutual fund scheme. Investment can start from as low as Rs 500 per month. However, there are some factors that will make your SIP more effective.
Let’s look at some key factors you may consider during investment through SIPs:
When planning your financial goals, it is very important to adopt a time-oriented approach depending on your needs. One can categories their goals as short term (to be achieved within three years), mid-term (to be achieved between three and five years) and long-term (to be achieved beyond five years) and make decisions according to that time frame.
Most mutual fund schemes allow investors to invest a minimum of Rs 500 through SIP. But the amount should be decided according to the investor’s financial goal, time frame to achieve the targeted goal and cash flows, duration and expected returns can help him/her determine the right SIP amounts to start your investments.
Investment in mutual funds comes with market-related risk. Every investor’s risk appetite is distinctly different. It is important to assess your risk appetite and accordingly select the scheme. There are various schemes available in the market with different risk profiles.
If you want best returns from your mutual fund through SIP, it is essential to review the portfolio after regular intervals. It may help you to understand non-performers and remove them.
As your income grows, you can increase your SIP amount. This can help you reach your financial goals faster.
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