Planning your finances is always the first step towards a secure economic future. SIP allows you to materialise the big dream with its many facets and instances. Let’s discuss how a good SIP investment can reap greater profits for you in the future.
Source: Value Research
Managing our finances is always a tough call. We often find ourselves struggling at the end of the month or during a crisis owing to mismanagement of our finances. By virtues of living the Carpe Diem life, we often miss out on the importance of saving and beneficial investments. Saving money in your bank against a meagre interest is just not enough if you want to live the big dream. This is where management of personal finance steps in. It is important to educate oneself about the management of personal finances for a positive influence on the financial behaviour. An understanding of personal finance helps you make informed decisions about your financial situation.
An effective way to manage your personal finance is to initiate investments through SIP in mutual funds.
SIP or Systematic Investment Plans is a process through which a predetermined amount is automatically deducted from your bank account in periodic intervals and invested in selected mutual fund schemes. It also averages the cost of units during markets’ volatility phase and eliminates the need to time your investments. SIP Investment is pocket-friendly, wherein you can choose the amount you want to invest while also determining the interval at which you will pay it. Person A can choose to invest INR 500 every month for up to a year whereas Person B chooses to invest INR 5000 for a period of five years. The success of SIP thus lies in the diversity and flexibility of its schemes.
According to sources, some of the best performing SIP plans in 2018 are ICICI Prudential Focused Bluechip Equity Fund, Franklin India Prima Plus Fund, DSP BlackRock Tax Saver, ICICI Prudential Value Discovery Fund, Axis Long Term Equity Fund, Reliance Tax Saver (ELSS) Fund, DSP BlackRock Equity Opportunities Fund, Motilal Oswal Long Term Equity Fund, Aditya Birla Sun Life Pure Value Fund and HDFC Equity Fund among others.
Selecting the Best SIP Plan
The most common thing one has to remember before investing is to find the right mutual fund. This is the stage that needs meticulous research and calculations. There are several online financial advisors to help you through this stage and avoid making rookie mistakes. You may even take the help of your tax advisor for the same. The importance of this step lies in the simple fact that upon investing in an incorrect mutual fund, you may incur loss or be stuck with an underperforming investment.
So, before planning your SIP investment, ensure that you do read the offer documents carefully, or else you will be subject to ‘market risk’ such as volatility and low liquidity. Investing a small amount, monthly is one of the safest bets and also the fastest way to earn the quick bucks.