Invest in a Mutual Fund's SIP, know its rules - Fast Blog News

Invest in a Mutual Fund's SIP, know its rules

Invest in a Mutual Fund's SIP
SIP of a Mutual Fund (Photo Pixabay)

Returns from mutual funds are not guaranteed. Understand the risks carefully before investing. By doing so, you will be safe from risk and a good investment can be made.

• There are instances in which SIP returns have been negative in the first two or three years. After a few weeks or months, the return on an annual basis crossed 10 percent.

• It is often observed that the investor is sometimes frightened and withdraws the money which he has to pay.

If you invest in a SIP of a mutual fund, you have to understand the rules of this investment. It is often observed that the investor is sometimes frightened and withdraws the money, which he has to pay. Take any Middle Quarterly Equity Mutual Fund and any previous 10-year SIP term, then you will see that their annual return is out of all other asset categories.

Not all investors who start SIPs are eligible for return. If you are an investor who wants to make a successful SIP investment, these three golden rules can help you.

Rule 1: Understand how things work

Many investors who go to SIPs from fixed return assets like recurring deposits and PFs actually do so because they are not well versed. Attracted by past returns of 12–14% over a period of 5-10 years, they assume that these returns will not actually be the same. There are countless instances in which SIP returns have been negative for the first two or three years and these returns have crossed 10 percent on an annual basis after weeks or months.

Discipline and patience are important

The magic of SIP can only be achieved through patience and discipline. If low returns frustrate you, or you invest through SIPs with the expectation of steady annual growth, you will never realize the full potential. So remember that you have to plan a lot when you travel with your SIP.

Rule 2: Don't stop-start-stop

It is often observed that investors sometimes close based on the volatility of the equity market and sometimes the SIPs close. It is important to know how investors generally react to market cycles. The boom cycle is very encouraging for investors. Most investors start SIPs when the market is booming. Because people who are performing so fast like it. But when it comes to a recession, most investors are frustrated and scared. He is a SIP.

Make the right habit for the long haul

Such habits prevent investors from building assets in the long run. Because the biggest advantage, the cost of the breast is not earned at such a time. In fact, stopping and occasionally initiating SIPs can be very deadly. It hurts you for a long time. You need to understand that you have to control your emotions. Stopping and restarting the SIP can only give a bad return.

Rule 3: Keep your goals in mind

Planned investments in volatile growth assets work best when their goals are clear. Interestingly, we have seen that SIPs with random numbers of Rs. 3681 per month continue for a long time while SIPs with round figures like Rs. 4000 are less disciplined.

Round-digit SIPs are performed randomly

This is because a random amount of SIP is chosen very carefully, taking into account your child's retirement or education. Round digit SIP is initiated at any time. For best results, prepare a financial plan before starting your SIP. Keep an eye on his progress.

Read Post: A Beginner's Guide to Mutual Fund - Step By Step

Requires monthly target SIP

If you want to retire with Rs 5 crore in 30 years, you should invest Rs 14,306 per month. For a child's graduation expenses in 15 years, invest Rs 10,008 per month for a need of Rs 50 lakh. Invest Rs 15,305 per month for a 20% reduction on a Rs 1 crore flat in 7 years. (This estimate is based on a CAGR return of 12% per year).

Returns from mutual funds are not guaranteed. Understand the risks carefully before investing. Doing so will protect you from risk and make a good investment. This can benefit your investment portfolio.

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