As the name suggests it is a Systematic Investment Plan…meaning you follow a systematic and disciplined approach to multiply your investment. SIP has made investment in mutual fund easy and accessible to very lay man. SIP allows you to invest as small as Rs500 or Rs1000 a month so that you grow your corpus over years to come. Just making small investment on a regular basis may not seem very imperative at first, but over years it can multiply to give you handsome returns.
Key points to maximize your returns through investment in SIP
- It is always advised to associate a SIP with your future financial goals such a children’s education, marriage or retirement. One SIP for every target. First make sure you know the amount that you need as a target for each of your goals. Keep in mind the ‘monster’ inflation while calculating the target. Invest in sip to meet those goals on a regular periodic basis. There are many online SIP calculation tools available. You can use this link to find out your target corpus requirement.http://www.moneycontrol.com/mf/sipcalculator.php
- Though SIPs allow you to invest small amount every month, you need not invest the same amount. SIP amount could vary according to your saving potential. It is always advised to increase your investment in SIP in accordance with your raising pay check.
- Also make sure that you diversify your portfolio in SIP. Make sure to invest in different SIPs to reduce the risk appetite and increase your returns.
- However, you can find people argue that recurring deposits in banks offer similar returns. Though it is not correct to compare sips with recurring deposits, it would be inappropriate to say which of the two is better, because the risk appetite of the investor is what is important in the end. Sips provide far more advantages compared to RD, when your investment tenure is longer than 5 years. Recurring deposits give consistent, but low returns, which in times of uncertain economies are unable to cover the inflationary pressures.
Some good SIPs available in market
- ICICI http://www.icicipruamc.com/equity-funds/ICICI-Prudential-Technology-Fund.aspx
- SBI http://www.sbimf.com/
- FT Feeder Franklin US Opps Fundhttp://www.franklintempletonindia.com/en_IN/investor/funds/fund-overview/16293/Franklin-India-Feeder—Franklin-U.S.-Opportunities-Fund
- SBI Magnum Mid-Cap MFhttp://www.sbimf.com/Equity_Funds/Midcap_Performance/index.html