Strong SIP Portfolio:Systematic Investment Plan (SIP) is a popular investment option in mutual funds, through which one can significantly increase one’s wealth in the long term. You get the full benefit of compounding in SIP. However, for this it is necessary to invest with the advice of an advisor after doing better research and keeping in mind some important things. If we look at the return history of mutual fund SIP, there are many schemes whose returns in the long run have been 12 to 15 percent per annum or even more. But if you make some mistakes, your returns may deteriorate. It is possible that your compounding may also become negative. In such a situation, it is important to remember some tips, so that you can avoid negative compounding.
There is an emergency! Take loan against mutual fund or apply for personal loan, choose the right option
SIP is increasing in popularity
The number of people investing through SIP in India and the value of investment are continuously increasing. Talking about March 2024, investment of Rs 19271 crore has come through SIP in 1 month. In the financial year 2024, there was an investment of Rs 199219 crore, whereas a year ago i.e. in the financial year 2023, the investment through SIP was Rs 155972 crore. This figure was Rs 124566 crore in the financial year 2022 and Rs 96080 crore in the financial year 2021. (AMFI data)
SIP accounts are also being closed
Continuous account for investing in SIP (SIP Account,Are opening. On the other hand, a large number of people are also being closed. For example, in February 2024, where 49.8 lakh new SIP accounts were opened, 21.33 lakh were also closed. That means there are many people who do not keep their accounts for a long period. It is obvious that many of them will be incurring losses. Or negative compounding might be coming.
Tax Free Bond: How to calculate returns in tax free bonds, understand the mathematics of coupon rate and yield.
Are you investing without research?
Many people invest money only after seeing the returns in any segment or investment option. If you also invest without any research, then you may incur loss through SIP also. While investing in any fund, one should always compare its past performance, outlook, shares included in the portfolio and expense ratio. Also take advice from the advisor.
set financial goals
Investing in mutual funds (Mutual Fund Investment)The mistake that many investors make is that they do not set their financial goals. Due to this, they are not able to invest as per their need. This may spoil your returns. At the same time, many times they are not able to maintain their investment as per the target set. In such a situation, when you need money for your goal, the funds generated through investment are not sufficient.
Magic of Small Savings: Make a habit of saving only Rs 250 daily, after 20 years small savings will do wonders.
Timing
A large number of investors make mistakes in timing the market. One should not wait for the market to become cheap to start investing. There are investment opportunities in the market all the time. Many investors get scared after seeing the turmoil in the market and withdraw money before the target. Even if their returns are distorted. Its effect is that when the market makes new highs, investors do not get the benefit from it. If you cannot maintain patience for a long period then you should not consider SIP.
diversity
Diversity is very important for successful investing. For this reason, while investing in mutual funds, emphasis should always be laid on diversifying the portfolio. Different categories of mutual fund schemes should be included in your SIP portfolio based on your risk appetite. Due to this, if one scheme declines, the returns of the other can handle the portfolio.
Scheme like savings account, but returns equal to FD, who should invest money and why
Periodic review of portfolio
If you are investing for the long term, then you should keep checking the returns of the mutual funds in your portfolio from time to time. If the mutual fund is consistently giving negative returns or is not performing in line with the market, then it is better to exit it keeping all considerations in mind.
(Source: AMFI, Financial Websites Blog)
