3 Golden Rules of Mutual Fund SIP Investing
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Read this blog to know 3 golden rules of investing in Mutual Fund SIP, since mutual fund SIPs have become incredibly popular in recent years. To know more, Visit us Now!
Mutual Fund SIP’s (Systematic Investment Plans) have gained tremendous popularity over the past few years, with the industry book crossing the 8,000 Crore per month mark recently. Think about it – that’s nearly Rs. 1 Lakh Crores of household savings that will be funnelled into Mutual Funds over the next twelve months. More and more smart savers are realising that for their goal achievement, Mutual Funds Sahi Hai! If you’re a SIP investor too, here are five things to keep in mind.
Don’t Try to Time Your SIP
With SIP’s, dispassion is the key to success. Just keep them running month in and month out, without bothering too much about whether it’s getting invested at the right time or not. It’s quite impossible to time the market anyways, and the very purpose of SIP’s is to allow the natural rhythms of the market to do the work of averaging your unit costs for you.
Let Time Horizon Override Your Risk Appetite
You may be a risk averse person, but with a very long-term goal. If that is so, you must disregard your risk tolerance so to speak, and start your SIP in an aggressive (equity oriented) mutual fund anyway. Conversely, you may be a high-risk taker but have a time horizon of just 3 years for your SIP. In such a case, channel your SIP into a low risk, debt oriented Mutual Fund despite your swashbuckling attitude! When it comes to SIP’s, your time horizon must be the sole determinant of your choice of fund. Doing anything else would likely prove quite regrettable in hindsight.
Align Them to Your Goals
Mutual Fund SIP’s work best when they’re firmly aligned to well defined, tangible and measurable future outcomes that you’d like to achieve – such as a comfortable retirement, a fantastic education for your child, a family vacation, or even a spanking new car! Speak with your Financial Advisor on the optimal target amount for your goals, and which funds would be most appropriate towards their achievement. Mapping your SIP’s to goals can help you see the bigger picture and remain relatively unaffected by the ups and downs of the markets, thereby reinforcing winning behaviours that would contribute to your long term investment success.
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