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7 FACTORS TO CONSIDER WHEN INVESTING THROUGH SIPS

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Systematic Investment Plan also known as SIPs have been the hot topic in the mutual fund industry for quite some time now. And why shouldn’t they, considering the several benefits these investment tools offer to investors, they have rightly gained their hold in the mutual fund markets. But before you decide to invest in SIP mutual funds, there are a few factors that you must be aware of. In this article, we will understand these different factors that you as an investor must keep in mind before you go forth with investing in mutual fund investments through SIP mode of investment.

Factors to consider when investing in SIP mutual funds

Following are a few parameters that mutual fund investors must keep in mind when they wish to invest in mutual funds through SIP investment:

  1. Setting time frame for investment goals
    All investors must adopt a systematic approach when it comes to planning for one’s financial goals. Your SIP investments can be further categorised basis varying investment duration of your goals such as short-term investment goals, mid-term investment goals, and long-term investment goals. Setting a time frame for all your investment goals can aid to select the right SIP investment amount and different mutual fund schemes that can help you achieve your goals in the stipulated time frame.

  2. Decide the right investment amount for your portfolio
    SIP mutual funds are quite affordable to almost all investors as these investment tools allow investors to invest in mutual funds an amount as low as Rs 100 per month. Research proves that an SIP made on an ad-hoc basis turns to be less effective than an SIP investment made after precise calculation and careful analysis using an SIP calculator.

  3. Do not forget your risk profile
    An investor’s risk profile is the amount of risk an investor is willing to take in hope of better risk-reward ratio. An investor must understand each investor has a different risk appetite and it is affected by several parameters such as age, investment duration, immediate financial needs (if any), disposable income, financial goals, etc.

  4. Do not forget to top-up your SIP investments if required
    During instances when you find yourself with an extra source of income due to various factors such as bonus, inheritance, salary hike, etc. do not forget to top-your SIP investments. This will help you to achieve your financial goals in a period less than the stipulated time duration.

  5. Have a separate SIP for separate goals
    All investors have different and various financial goals they wish to achieve in their lifetime. It’s important to have a separate SIP investment account for each of these goals. This will help you to allocate your money in a smart manner in different types of investment that will help you meet your financial goals.

Do not forget to review your financial portfolio on a regular basis. This will help you identify underperforming funds and switch to other mutual fund schemes if the fund has been continuously underperforming for quite some time. Happy investing!

Systematic Investment Plan also known as SIPs have been the hot topic in the mutual fund industry for quite some time now. And why shouldn’t they, considering the several benefits these investment tools offer to investors, they have rightly gained their hold in the mutual fund markets. But before you decide to invest in SIP mutual funds, there are a few factors that you must be aware of. In this article, we will understand these different factors that you as an investor must keep in mind before you go forth with investing in mutual fund investments through SIP mode of investment.

Factors to consider when investing in SIP mutual funds

Following are a few parameters that mutual fund investors must keep in mind when they wish to invest in mutual funds through SIP investment:

  1. Setting time frame for investment goals
    All investors must adopt a systematic approach when it comes to planning for one’s financial goals. Your SIP investments can be further categorised basis varying investment duration of your goals such as short-term investment goals, mid-term investment goals, and long-term investment goals. Setting a time frame for all your investment goals can aid to select the right SIP investment amount and different mutual fund schemes that can help you achieve your goals in the stipulated time frame.

  2. Decide the right investment amount for your portfolio
    SIP mutual funds are quite affordable to almost all investors as these investment tools allow investors to invest in mutual funds an amount as low as Rs 100 per month. Research proves that an SIP made on an ad-hoc basis turns to be less effective than an SIP investment made after precise calculation and careful analysis using an SIP calculator.

  3. Do not forget your risk profile
    An investor’s risk profile is the amount of risk an investor is willing to take in hope of better risk-reward ratio. An investor must understand each investor has a different risk appetite and it is affected by several parameters such as age, investment duration, immediate financial needs (if any), disposable income, financial goals, etc.

  4. Do not forget to top-up your SIP investments if required
    During instances when you find yourself with an extra source of income due to various factors such as bonus, inheritance, salary hike, etc. do not forget to top-your SIP investments. This will help you to achieve your financial goals in a period less than the stipulated time duration.

  5. Have a separate SIP for separate goals
    All investors have different and various financial goals they wish to achieve in their lifetime. It’s important to have a separate SIP investment account for each of these goals. This will help you to allocate your money in a smart manner in different types of investment that will help you meet your financial goals.

Do not forget to review your financial portfolio on a regular basis. This will help you identify underperforming funds and switch to other mutual fund schemes if the fund has been continuously underperforming for quite some time. Happy investing!

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