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All you need to know about selecting the best SIP

  • Highlights

  • Mutual funds of 5 years and older are more reliable

  • Different financial goals require different SIPs

  • Investments in SIP can be claimed for tax deductions

  • SIPs offer twice as much returns and can beat inflation

Investing in an SIP can help you regularly contribute towards a financially stable future without having to constantly worry about market fluctuations and how they could affect your returns. When it comes to SIP vs mutual funds, you already know that SIPs are a better way to invest instead of a lump sum investment. This is because SIPs even out the profits and losses of the market, making the risk involved nominal for you. Additionally, you can maximise your returns by knowing how to choose your SIP.

Here is how you can select the best SIP.

What to keep in mind while choosing an SIP

First, it is important to make a note of your financial goals, whether they include international travel, down payment for a home, education fees, or the purchase of a vehicle. This is because your investment timeline determines what SIPs you can choose.

For first-time investors, it is also safer to ensure you are investing in a mutual fund that has been in the market for more than 5 years.

Most genuine and reward-reaping mutual funds have an asset size of Rs.500 crore, so choose them when you are starting off.

Also choose SIPs based on your risk appetite for best returns. Pick midcap and smallcap equity schemes if you are an aggressive investor with long-term goals and can stay invested for at least 5 years. On the other hand, if you are a moderate or conservative investor, choose diversified equity schemes or equity-oriented balanced schemes.

Next, choose a reputable fund house to manage your SIP, and check the ease of investing and withdrawing too as this plays a huge role in how conveniently you can access the funds. If you want to invest in a particular kind of SIP, make sure to assess its past performance too. Check the long-term results for equity mutual funds spanning at least 5 years, and the short to medium performance if you’re interested in debt funds.

5 Reasons why you should invest in SIPs

Last but not least, see the recurring cost of your SIP, which includes the expense ratio as well as the exit load if you decide to withdraw prematurely.

In most cases, your bank’s financial advisors can help you find an SIP to invest in, but their recommendation will be based on the bank’s offering. So, it is better to enlist a financial advisor to select the right SIP for you. Leading NBFC’s like Bajaj Finserv offer top SIPs that promise lower transaction costs, transparency of investment strategy, and expert analysis for investments. You can also use an SIP calculatorto see the potential returns before you invest.


Advantages of investing in an SIP

When you invest in a SIP, you gain more than just good returns with added benefits. You can leverage the power of compounding and experience flexibility as the lock-in period for SIPs may be as small as 3 years. Furthermore, investing in an SIP means you can gain tax deductions on your investment under Section 80C. You can also choose to start investments as low as Rs.500. In addition to this you can also withdraw or redeem your accumulated funds during times of emergency financial requirements. Your busy schedule need not hold you back as automated payments are made from your savings account to contribute towards your SIP.

So, use the above information to make the most of SIPs and begin your journey towards wealth accumulation backed by informed decision-making.

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How to Redeem or Cancel Your SIP


How to redeem or cancel your SIP