There’s no denying that the uncertainty of the future is frightening. After all, anything can happen, and your stability can be threatened. While such situations might make you feel powerless, it doesn’t have to be this way. You can have control of your life, no matter what happens. Isn’t that the best form of power?
Now if you agree, you should learn what is SIP in mutual fund.
That’s because SIP lends you an additional source of income. In this way, it relieves your excessive dependence on your job for your income. In fact, once you understand what is SIP in mutual fund, you have options at your disposal. Using all these options, you can create a secure and stable future for yourself.
That’s power in its purest form. Now if you are ready to take on this power, then read on to know what is SIP in mutual fund and how you can start investing.
What Is SIP In Mutual Fund?
Market fluctuations are a common occurrence. So, you are dealing with slight unpredictability if you decide to invest your money in a mutual fund scheme. However, you can protect yourself against such uncertainties. This is where knowing what is SIP in mutual fund can help.
If you have decided to build a second income stream, you might be tempted to invest in funds. However, before you make the impulsive decision to invest in your chosen fund in one go, do listen to what we have to say.
The market is unpredictable. So, if you feel that your chosen fund has been performing well for the past few months, there is still a high risk that it might underperform in the coming future. This might make things bad for you if you are riddled with loans and debts.
However, once you understand what is SIP in mutual fund, you can avoid this kind of loss.
SIP is the abbreviation of Strategic Investment Plan. It provides an investor with a disciplined way of investing in their chosen mutual fund scheme. They ensure this organised and systematic procedure is followed by allowing the investor to invest at regular intervals. Now, this regular interval could be weeks or months. It could even be years.
The biggest advantage of investing in this manner is that you get to keep a close eye on the performance of your funds. You can see if it is rising or dipping. Accordingly, you can change your strategy at the next interval.
On top of this, you also get to enjoy the benefits of compounding. SIP offers compound interest on the investments. That yields big results after it reaches its maturity period.
How to Invest in SIP in Mutual Fund
So, you are aware of what is SIP in mutual fund. Now the next step is to understand how you can invest in SIP to reap its benefits.
1. How Much is Your Risk Tolerance & What Are Your Goals?
Markets are subjected to unpredictable fluctuations. So, if you are going to deal with it, you need to be aware of how much risk you are ready to accept. Not only this, but you also need to be aware of your financial goals. You should be clear on what is your purpose behind investing in SIP in mutual funds.
2. Be Extremely Selective About Your Mutual Fund Scheme
Educate yourself about the different types of mutual funds in India. Look up their past performance and then make an informed decision. Here, it also helps that you are clear with your goals. All these things will help you in choosing the right mutual fund schemes for yourself.
3. Select a Date & Duration for Your SIP
In a SIP, you don’t need to manually move the funds from your account to your other. In fact, it happens on its own, every month, throughout its duration. However, you do need to set the date as well as the duration of the SIP.
4. Invest till the End of the Maturity Period
For the best results, it is crucial that you complete your maturity period. That’s because, by the end of that period, you would have collected a bigger return, owing to the compounding power of SIP.
Educate yourself about what is SIP in mutual funds. That’s because a SIP can provide amazing benefits for your life. You will have an assured additional source of income. On top of that, you are also protected against market fluctuations. So, look up different types of mutual funds in India, make an informed decision and select the right scheme to invest in.