Systematic Investment Plan: How To Increase The Mutual Funds
Do you want to secure your investment? Are you looking up ways to improve your bank balance? Do you have any plans to invest in the stock market? If you have nodded with a big yes, then you should check out SIP. Systematic Investment Plan is for anybody who is interested in fortifying the money with least risk factor involved. Yes, now SIP will guide you to a better business in the stock market.
Things to know about the SIP
If you know about Recurring deposits, understanding SIP will become easier for you –because it is similar to recurring deposits. You deposit an amount less than RS.500 every month in a specified mutual fund for a specified period of time –just like in recurring funds. By doing this, you can significantly reduce the amount you pay to buy the mutual funds units at varying levels. In addition, you can also balance out the cost of buying over the time.
Tips to optimize the SIP returns
Remember, if you are investing in the business, stay aboard no matter what. The market is going to go up and come down, but that is how trends are. You need to stay in the business for a long run –prepare yourself mentally about it. Unlike people who invest when the market goes up and opt out when it comes down, cannot understand the volatility of the market. If you stay for long, you can not only understand but make the most of it at lower prices. During the market plunge, if you opt out, you miss out the great opportunities of purchasing extra units at lower prices –of the mutual fund. If you have these extra units in your hand, you can use them when the market surges. To make the most of SIP, the least cycle is of three years.
Tricks to hold up in the market
If you have planned for a long term business, you need to remain strong. It is bit tricky not tough. The best way is not to rely on only one mutual fund scheme. Keep at least three to five in hand. But remember; do not exceed more than five. In order to go deeper in the market, you would need more money and more mutual funds on your portfolio –but it is not advised. You must know how to diversify your business. Rather putting all money in the same mutual fund, you can instead divide the capital into unequal shares and invest in different mutual fund schemes.
Another important trick is to diversify the sector of investment. Do not invest all your money in the same sector. For instance, do not just invest in banking, try out other sectors with growing or better opportunities in terms of profit.
See the approach you are doing the business. According to the experts, Step-up approach is the best approach to win your extra money and of course save the capital. For this, you need to keep a record of your profit. If your income is increasing, your savings and SIP must increase too. But do not invest all amount in buying new schemes. There are times of inflation as well. The market changes its trends and so must you.
Remember, the Indian market is very volatile. You cannot predict exactly what is going to happen the next moment. The market trends significantly affect the SIP. So, make sure you have a remedy to this. In order to save yourself from a sudden jolt and a big ordeal, set multiple dates for SIP investment. For example, if you have purchased five different mutual fund schemes, you must have five different investment dates on your calendar.
SIP schemes are not for children. You cannot play blindly. You need to set up goals and to achieve those goals you must have a strategy. Before strategy, let us set the financial goals for motivational purpose. You work best when you are motivated. Assign each SIP mutual fund to a financial goal. For instance, the first scheme for buying the new car, the second for children’s education, the third for post retirement scenario and so on. If you have any debt to repay, put it on the short term financial goal.
Now comes the strategy…you should know what and where did you invest and how it is turning out for you. Make it compulsory to review the performance of the mutual funds every quarterly or maximum every six months. If any mutual fund scheme is not giving you as mush profit as you expected, opt out and look for the one more lucrative.
Another good strategy is to use a proper withdrawal plan. You can transfer a fixed amount from one mutual fund scheme to another. If you have good savings, rather keeping them in the bank you can liquefy them and use them in mutual fund schemes.