Investing In SIPs: Be Careful On These Fronts

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SIP which provides gains to you mainly on account of rupee cost averaging should be started with a cautious approach. An investor needs to a watchful heed on these fronts as else they may not be able to recoup the best advantage.

Investing In SIPs: Be Careful On These Fronts

First, do not invest lump-sum: The benefit of rupee cost averaging and best timing the market which is well a reason to invest through the SIP route shall falter in case you divert a substantial surplus in the scheme at one go. So even if you have a significant cash at hand, do not take the SIP route with large amounts.

Remain invested in SIP for long time: SIP provides good returns when you remain invested in them for atleast say four years. As the historical data shows with the complete cycle of staying invested in the SIP, investors chances of incurring any losses are greatly reduced.

Also, while investing for a long term, you can either opt for diversified set of funds for your SIP scheme or choose allocation in large and mid cap funds based on your risk appetite.

Step-up Your Investment in SIP in line with your financial goal: Once you have begun getting good enough returns from the scheme, it is time you begin to shell out some more to better finance it and meet your long term financial goal. At present, the annual return on an average basis recouped from SIP is around 12%. Say you are taking the SIP route to accumulate for the down payment of your home, you need to invest accordingly and not a mere sum would be of any help in the long run.

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Story first published: Friday, September 22, 2017, 13:40 [IST]
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