4 strategies for investing in SIP

First, let’s start by understanding the meaning of SIP Mutual Fund? This is a systematic investment plan (SIP) where investors make regular, equal payments into a mutual fund and it also allows investors to save regularly with a smaller amount of money while benefiting from the long-term advantages of rupee cost averaging.

Systematic Investment Plans (SIPs) are one of the easiest ways to start your investment journey with an amount as low as Rs.500. In addition to this, keeping a few strategies in mind will help to achieve your goals quicker!

Is it likely that if you follow these strategies for starting a SIP mutual fund, it will help to achieve your goals? Yes, it’s that easy provided this is done religiously.

  • Why should you start a SIP Mutual fund investment?

Firstly, this gives you a purpose for the investment plan. It gives you an estimate of your savings to achieve your specific goals. Secondly, it adds an emotional value for example: planning for a holiday or buying a house. Investments made without any purpose or direction may not help you achieve your goals. This also becomes a futile exercise. Ensure you follow this step before investing in a SIP. Use a SIP Mutual fund calculator that determines your goals better

  • Think long term and not short term

SIP helps you navigate through market uncertainty and hence it is essential to keep a long-term investment horizon to average out the cost of your investments and give you the benefit of compounding.

  • Use Asset allocation strategy to reduce risk

It is not uncommon to see investors chase performance. This also comes with high risk and return factors that you need to understand clearly. While equity funds may have generated progressive returns over the last few years, but one must not ignore the risks associated. Therefore, diversification in each asset class judiciously is essential i.e. between debt, equity, and gold. So, your equity SIP portfolio should have the right mix of large and mid-caps, along with growth and value style

  • Choose funds that have stringent rating parameters

Past performance is not an indicator of future returns. This is an important statement as it justifies that there have been top-performing schemes in the past that do not give such high returns anymore. Thus it is advised that investors should not choose a SIP mutual fund merely on the top performance. Therefore, you need to check not only quantitative but qualitative factors such as; are the funds are well managed, is there a process-driven approach, and whether they stay true to their label, among others.

Disclaimer, Statutory Details & Risk Factors:

The views expressed herein in this article/video are for general information and reading purposes only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide/investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared based on publicly available information, internally developed data, and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as of date. Readers of this article should rely on information/data arising out of their own investigations and be advised to seek independent professional advice and arrive at an informed decision before making any investments.

Mutual fund investments are subject to market risks read all scheme-related documents carefully.

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