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- Mutual Funds Investment, Systematic Investment Plan| Fund Returns and Strategy
New Delhi1 day ago
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If you are planning to invest in mutual funds, then investing through a Systematic Investment Plan ie SIP can be a better option. Through this, you can easily create a large fund by depositing small amounts.
There are some misconceptions in people’s minds about investing money in mutual funds through SIP. We tell you some important things related to SIP. So that you too can invest in mutual funds without hesitation…
Is long term SIP investment a profitable deal?
There are many different types of mutual funds like equity, debt and hybrid funds etc. It is often seen that investing in equity funds proves to be more profitable in the long run. The reason for this is that by doing SIP in equity funds for a long time, the risk of fluctuations in the stock market is reduced.
The lows and highs of the stock market create average returns and also have a compounding benefit. But it is not true that there are no mutual funds for the short term. Investors can also do SIP in debt or hybrid funds keeping in mind their need and investment period.
Is SIP the best way to invest?
It might not be appropriate to call it the best way to invest, but it can definitely be a good way to invest for people with regular income such as salaried people and businessmen who have a fixed income every month. Investing through SIP does not put a heavy burden on the pocket and by investing small amounts continuously, a good amount can be accumulated in the long run.
How important is fund selection in SIP?
Choosing the right fund for SIP is very important. Not all funds are the same. A mutual fund can have more or less risk and return potential depending on the type of securities or assets it invests in. Also, you should decide how much SIP you want to do based on your financial goals.
Although a SIP of at least Rs 100 per month can be done in many mutual funds, it may not help you achieve your goal. So, invest as much as you can as per your capacity and keep increasing the SIP amount with time.
Should one invest in equity mutual funds through SIP?
Equity funds mean such funds that invest investors’ money in the stock market. Although there is more risk in equity mutual funds, historically it has been seen that investing in equity mutual funds has the potential to give higher returns in the long term.
When should one invest money in SIP?
SIP is a way of investing regularly. You can continue this regardless of the market level. If there is a recession then you will get more units for the same money and if the market is bullish then you will get fewer units and in the long term the price of your unit will become average.
Is it better to invest money in daily or monthly SIP?
There is an option to invest daily, monthly, quarterly in mutual funds through SIP. The facts that have emerged in research in the last few years show that in the long run, it does not matter how many times you do a SIP in a month if the amount of SIPs done throughout the same month.
When to invest money in SIP to get more benefits?
The date you do SIP makes little difference to your returns in the long run. You can invest close to your payday or on days when you are most likely to have money in your bank account.
Can I exit SIP midway, what will happen if no deposit is made in any month?
If you want to close your SIP for some reason before the specified period then it is possible. You can usually withdraw the invested money and, if you wish, leave the invested amount for growth and stop further SIPs.
Can I invest a lump sum in an already running SIP?
Absolutely this can be done. Whenever you have some extra money left, you can invest it in the same folio. An additional lump sum investment in a continuous SIP can be even more beneficial during a downturn in the stock market.
Is SIP for small investors?
Answer – Most people think that SIP is for small investors, this is not true. Most mutual funds do not have an upper limit for SIP installments. So, if you wish, you can also start a monthly SIP with a larger amount like Rs 5 or 10 lakh. The minimum amount for SIP installment often varies from Rs 500 to Rs 1,000 per SIP. In some funds it may be only Rs 100.
