Investment in mutual fund helps you to secure corpus funds over a prolonged period of time. Now the question that might be doing the round is whether to opt for SIP or lump sum. There are numerous benefits of investing in SIP as follows
- Regular saving- SIP calls for monthly weekly or yearly savings. For a salaried individual this works out to be a better option as they can deposit a regular sum of money to mutual funds. There is no need to pool in a lot of funds at a single go
- Hassle free- to make investment in mutual fund is a hassle free process. By securing an ECS mandate from your bank you might be able to make investment in mutual funds in an easy manner. For your SIP plan you can go on to make regular payments
- Flexibility- the best part about a SIP plan is that it is flexible in nature. When investing in a plan investors can increase or decrease the amount of investment. Also the investor is in a position to exit the plan at any point of time. This flexibility and freedom allows the investors to make a foray into mutual funds at any point of time.
- Risk aspect lower – as the investor ends up putting small portions of money into an investment plan low risk is associated in losing funds and there does exist the probability of making more money from such investments.
Mistakes you need to keep away while investing in mutual funds
Till date SIPs provides a convenient option to invest in mutual funds, still there does exist a degree of risk when it comes to making an investment in mutual funds. In fact there are some common mistakes to avoid during the course of choosing a mutual fund
Choice of a wrong fund
When you are choosing a fund make sure that it aligns with your needs, otherwise you end up losing the ability to be paying for such funds. It is a better choice to discuss with your bank manager on the funds that you need to purchase as it has to align with your financial goals.
Investing higher amount
As you are forced to churn in a decent some of money every month, make it a point that you do not cough a higher amount. This means that you might have to put aside a specific portion of your salary which cannot be put to use for some amount of time.
Do not set up unrealistic goals
The key is not to set up unrealistic goals and expect something impossible that would be hard to achieve. To be reasonable it is suggested that you can expect a return in the margin of 10 % 20 %. As a beginner you might have to feel the rush.
Now the question is what is the amount of money you should invest in a SIP to start off with .You can start off with as low as Rupees 500.