Tag

investment planning

Browsing

SIP Investment

“SIP of Rs 5000/ – started on 1st July 2010, has become Rs 18.84 lacs as on 1st July 2021 (Actual Figure)”

What is SIP?

SIP is a short form for Systematic Investment Plan, As the name suggests, it is a method of regular investments. Like when u invest a Fixed amount every month in a Mutual Fund Scheme, it is called a SIP.

Where to Invest SIP?

It is advised to start the SIP in a Diversified Equity Fund, for better long-term growth. Systematic Investment Plan works on the principle of SNOWBALL theory – the longer you go, the bigger it grows. Volatility is the food for Investing.

How to open a SIP Account?

Opening a Systematic Investment Plan account is very simple. You just need to check if you are a KYC compliant, and then sign an ACH mandate with your MF Distributors, for monthly deduction of the SIP amount; that’s it!

3 TIPS TO GET THE BEST FROM YOUR SIP

SIP TIPS

Systematic Investment Plan is a very convenient method of investing in mutual funds through standing instructions to debit your bank account every month, without the hassle of having to write out a cheque each time. Currently, mutual funds have 3.73 crore SIP accounts through which investors regularly invest in Indian mutual fund schemes.

1st TIP TO GET THE BEST FROM YOUR INVESTMENT

SIP is nothing but a piggy bank! You should assign all your SIP to your Financial Goals, like home painting, Foreign Vacation, Social Gifting,  for Kids education etc. This will help you maintain the discipline of investments and inspire you to save.

2nd TIP TO GET THE BEST FROM YOUR INVESTMENT

Always check your estimated future Value, before starting a Systematic Investment Plan; I have given below the reference table of Rs 1000/- per month at an assumed rate of 12% p.a*, just for your help.

Tabular Table SIP

*Note: Above the table is just a ready reference for your help. 12% p.a is just an indicative return, taken for the purpose of calculation. The actual Average ROI of Top 5 Diversified Equity funds is 18.5% p.a, in 20 Years period.

3rd TIP TO GET THE BEST FROM YOUR INVESTMENT

Always allocate your Systematic Investment Plan according to your target period and Liquidity requirement. Like, if you want to start a SIP for a shorter period (< 5 years), they prefer a large Cap or Hybrid Fund, and if you are looking to start investing for a longer period (7-10 years or more), you can select Midcap or Small-Cap Funds. I have given below the real historic chart of some of the long-term SIPs in Indian Equity Mutual Funds:

One can see the advantage of investing over the long term – An investment of Rs 5000 per month has been converted to huge wealth if you have kept the discipline of investing.

Check more articles like this.

1