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6 things to remember in a systematic investment plan


 6 things to remember in a systematic investment plan
To beat market volatility and save regularly, the SIP or systematic investment plan has often been recommended. An SIP works like a recurring deposit, whereby you put a certain specified amount each month in a mutual fund, which offers SIP. Here are a few things to remember/do in a SIP.

1) Monitor the fund closely


Monitor the fund where the SIP has been placed regularly. You can also look at the stocks and the sectors and if you have a fair understanding can decide on further investments or switching the fund.

2) Diversify the SIP if you have multiple SIPs

If you are investing in two SIPs, and say if they have similar features or holdings, you would do well to diversify. For example, even if they are in two different mutual funds, but their holdings are the same, you are going to get almost similar returns.

3) Invest with discipline

A certain level of discipline would be needed while investing in a SIP. This means that you should not be skipping your investment regularly.

4) Invest for the long term

Set no targets and invest for the long term. If the fund is an equity dedicated fund, then the returns are likely to be better over the longer term.

5) Do not withdraw even if you are tempted to do so

Unless you need the funds for an emergency, it would be better if you stay invested and are not tempted for reasons like buoyant market conditions.

6) SIP is not guaranteed to give returns

SIPs cannot guarantee you returns, like most other equity related schemes. It's just that since you are not an expert and cannot time interest rates and equity markets, it just helps you spread the risk better.

Read more about: sip
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