The popularity of SIP in Mutual funds has gone up over the most recent couple of years. Numerous investors believe that a SIP is a product. It very common to think - would I be able to invest through a SIP to accomplish my objectives?
A SIP isn't an equivalent word for a mutual fund. It is a simple device that encourages you to invest routinely in a mutual fund scheme. A SIP encourages you to invest your money in mutual funds over a period.
Here's a brief for understanding how to invest through SIP in mutual funds. And how you can utilize it to make money over a significant period to accomplish your drawn-out monetary objectives.
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What do we mean by SIP in Mutual Funds?
Before diving into the topic, let's discuss what do we actually mean by a SIP investment. A SIP (SYSTEMATIC INVESTMENT PLAN) is referred to as one of the best ways to invest for our future benefits.
The SIP allows you to invest the amount as per your own choice, depending on what you earn or how much you really want to give out in the market.
The timings are flexible, whether you invest monthly, quarterly, or even yearly.
Altogether, everyone aims for a particular amount of wealth in the long run and starting at an early stage in your life.
Thus, one can definitely reach that aim through SIP Mutual Investment.
Let us look at the 2019 SIP Investment:
Now from the given data, we see that some of the firms in our country give you sip at higher risk with a good return in a shorter time. While some take it a longer duration to give you good returns.
The money doesn’t pace up as quickly as in the stock market, but the returns are quite good.
Go for the mutual investment with the schemes that have performed better over a period of time, say 2-3 or max 5 years.
You can check that out through all the online advertisements or e-papers as well.
SIP Mutual Funds in India - Two Categories
SIP Investment in India runs at a good rate. As we all see, India ranks as one of the fastest-growing countries in plastic money, the money all going into the market and giving the required benefit.
This is why the percentage of SIP investments has increased in India presently (reported by MOTILALOSWAL.COM).
It comes under two categories: SIP DEBIT & SIP CREDIT
Both of the services are done by using ECS (Electronic Clearing Service). Because the countries are digitalizing, the process has become much easier and convenient for the investors, while availing all of the information online.
Moreover, it can be checked at just an instant click.
1. SIP CREDIT: SIP Credit is required when you invest in for large value or heavy lump sum amount in the mutual plan, the money which is further used to make big payments like salary amount.
2. SIP DEBIT: SIP Debit is required when you invest in for smaller amount in the mutual plan, to facilitate your own payments such as cover up the bills for electricity or mobile phones, etc.
The SIPs in India has risen at a sharp rate as it provided the investors with much better plans and returns.
One could not get it while keeping it in the savings account.
The volatility rate has been better in the past few years, with its reduction due to the high flow of Nifty in the market, which led to a higher increase in SIP investments, giving you fewer risks and consistent returns.
Now the question comes as to who are the ones who get ready to invest in the SIP mutual plan?
The ones who are salaried, after spending on their monthly expenses, invest up some of their savings to the mutual investment.
Retailers also come as a huge percentage to participate in the investment.
Problems faced in SIP Investment
RISK: People do consider the amount of risk present in investing, whether it is SIP or stock shares. The market is not in surety, it may go up in a second and down too, making it not necessary for you to making money.
THE FUND HOUSE MIGHT BE THE PROBLEM: It doesn’t happen much but is a part of the problems you could have while investing in SIP. The funding house may delay itself in depositing the amount you gave for your SIP investment, failing to give the return on time.
CRISIS HIT BANKS: While no one is aware of the future, but what if the bank that provided you with the best plans, take the money you have to invest, and fail to return back because it hit a huge crisis in the future.
LIMITED CHOICE FOR CHOOSING THE DESIRED DATE: SIP Investment can be done within the period given by the customer, either monthly, quarterly, or yearly. Although, the customer is allotted limited dates, which is why one needs to decide the dates in advance.
SUITS TO SPECIFIC PEOPLE ONLY: Not everyone (as per the circumstance) could go for SIP Investment because it requires the condition of regular cash flow. Self-employed people do not get that, which is why it is not suitable for them to invest in SIP.
The solution to the problems
CHECK THE PLAN: Before investing in any plans of any of the firms, have a background check of their SIP Investments done in the past few years, going in detail about the pros and cons, hence avoiding the money to get stuck in the future.
RULES AND POLICIES: Refer to the rules and policies of the schemes and plans you decide to take.
GOOD SAVING HABIT: SIP Investment allows you to form a great savings habit, ensuring a secure future for you and your family as well.
SIP mutual investment is one of the best investment plans, where the customer can track the investment plans, making it less stressful for one.
A great wealth creation tool for the future, SIP investment gives you high returns with a balanced liquidity flow of money (subject to market risks).
It is thus important and beneficial for you to invest in order to get good returns.
The investment works in disciplined order, ensuring the bank gives you the money till the installment date.
It is very important for the investor to select the scheme, which suits their long-term goals.
Also, there is no suitable period within which an investor should start a SIP investment, the sooner the better.
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