7 Key Things You Must Know About Mutual Fund SIPS
Do you find yourself contemplating about investing in mutual funds via SIP (Systematic Investment Plan) route? You are not alone. A lot of investors fail to realise this successful way of investing in mutual funds. Assuming that you are clear about what is SIP, this article will try to give you a better picture of SIPs.
5 key things you must know about SIP investments
You can pause your SIP investments :
The facility to pause your SIP investments temporarily became even more important during unprecented times like now which has resulted in pay cuts and job loss. An investor could pause their SIPs before as well. However, the entire process took around a month. Nonetheless, one must remember that SIP investments are a roadmap to attain your long-term goals. So, it’s better to pause your SIPs rather than stopping them altogether.
You can step-up your SIP investment to align with your growing income levels :
A top-up SIP, also known as step-up SIP helps you to increase your investment amount as your income grows. People often start with a low SIP amount when they initially start their investments. However, they don’t have to stick with their low amounts. So, it’s advised to align your investment amount with your income to earn better returns.
SIPs tend to work gracefully in falling markets :
This might sound ironic but there’s a logic to it. When you make an SIP investment in a falling market, you actually attain more mutual fund units for the same monthly investment amount. This helps in the concept of rupee cost averaging that further reduces the cost of the SIP.
You can run SIPs on your debt funds as well :
One of the common misconceptions regarding SIP investments is that SIPs can be done only in equity markets. As an investor, you are free to invest in SIP in debt funds as well. However, if your primary goal is to generate wealth then SIPs in equity funds is a better choice. However, if you are looking for stability, then consider debt funds.
You can also insure your SIPs :
Several investors are unaware of the fact that they can attach their SIPs to insurance. To promote investments via SIP, several mutual fund houses have come out with an added facility of insurance cover embedded into your SIPs. It ensures that in the event of an untimely demise of the SIP investor, the SIP continue to generate value to the family.
Now that you have a better picture of SIP investments let’s hope that it drives you to take an important step towards financial independence. You can also use a mutual funds SIP calculator, or commonly known as an SIP calculator to evaluate the returns on your investments. This will help you give an idea about the future value of your investments. Additionally, an SIP return calculator can also be used to determine the required SIP amount needed to reach a specific corpus in future. Remember, the earlier you start, more will your investments grow. Happy investing!