INTRODUCTION
Systematic Investment Plan (SIPs) are an essential tool for investors to manage their money in a simple and disciplined way. With Mutual Fund SIP, investors can average out their investment costs and reduce the impact of market volatility by investing a set amount of money at regular intervals. By consistently investing small amounts of money, this strategy takes advantage of compound interest, which helps to create an extensive portfolio over time.
This article will explore why SIPs are the ultimate investment choice. Discussing various benefits that help inventors to make the right decision through systematic investment plans.
WHAT IS A SYSTEMATIC INVESTMENT PLAN?
A systematic investment plan is very simple to understand. SIP or Systematic Investment Plan, is a strategy that allows investors to invest a fixed amount of money at regular intervals, usually monthly. This approach enables investors to accumulate units of an investment fund over time, which can lead to potential profits in the long run. By investing regularly, investors can take advantage of the power of compounding and benefit from the average cost of the units purchased over time. SIP is a popular investment option for those who want to achieve their long-term financial goals and build a diversified investment portfolio.
WHY INVEST IN A MUTUAL FUND SIP IN 2024?
The most common reason investors are attracted to SIP investments is that they provide a regular savings plan.
Likewise, they provide multiple advantages to the investors. Following are some advantages which decide to invest in SIP more easily.
Rupee cost-averaging benefits
SIPs enable investors to buy more units during periods of low price and fewer units during periods of high price. Rupee cost averaging is a method of investing that helps minimize the effects of market volatility. As it helps to decrease purchase costs over time, and many people choose it as their first investment option.
Disciplined investing
Systematic Investment Plans (SIPs) encourage investors to use a disciplined approach to investing by having them make regular investments, typically once a month. This consistency helps create a saving and investing habit, reducing the habit of timing the market or making careless financial decisions.
Flexibility
SIPs are a flexible investment choice because investors may choose how much they want to put into them. Additionally, individuals can adjust the investment amount according to their changing financial situation by adding or subtracting from it.
Affordability for different investors
SIPs are available for a wide range of investors, including those with limited financial resources. Investors can participate in the financial market without having to make an expensive initial commitment by starting small.
Diversification
With SIPs, investors can divide their money among different mutual funds schemes and asset classes, thus diversifying their portfolios. To spread risk and create a more secure and well-balanced investment portfolio, diversification is necessary.
Top 5 Mutual Fund Schemes 2024
ICICI Prudential Large & Mid Cap Mutual Fund
Investment objective
This scheme aims to achieve long-term capital appreciation by investing mainly in equities, with 95% invested in equities and the rest in debt and money market instruments.
Fund house name: ICICI Prudential Mutual Fund
Category: Equity- large and mid-cap
CAGR: 18.68%
Benchmark: NIFTY LARGE MIDCAP 250 TRI
Nippon India Large Cap Mutual Fund
Investment objective
This scheme will invest in equity or equity-related instruments of companies within the market capitalization range of the BSE 200 index.
Fund house name: Nippon India Mutual Fund
Category: Equity- large-cap
CAGR: 12.89%
Benchmark: S&P BSE 100 TRI
Quant Small Cap Mutual Fund
Investment objective
The scheme aims to produce current income and capital appreciation by investing in a well-diversified portfolio of fixed-income securities with moderate risk. The fund may have exposure to equity and money market instruments.
Fund house name: Quant Mutual Fund
Category: Equity- small cap
CAGR: 13.35%
Benchmark: NIFTY SMALL CAP 250 TRI
HDFC Mid Cap Opportunities Mutual Fund
Investment objective
The fund invests in mid- and small-cap equity and equity-related securities to generate long-term capital appreciation.
Fund house name: HDFC Mutual Fund
Category: Equity- mid-cap
CAGR: 17.95%
Benchmark: NIFTY MIDCAP 150 TRI
Parag Parikh Flexi Cap Mutual Fund
Investment objective
The scheme aims to achieve long-term capital appreciation by investing primarily in equity and equity-related instruments.
Fund house name: PPFAS Mutual Fund
Category: Equity- flexi-cap
CAGR: 19.66%
Benchmark: NIFTY 500 TRI
IMPORTANT POINTS TO REMEMBER
Start SIP Investing Early to Achieve Long-Term Profits
Early SIP investment initiation is essential for optimizing long-term profits and enjoying substantial advantages from the selected best SIP plan. The potential rewards increase with the length of time you invest.
Understand Your Financial Needs
Determine your financial objectives, including saving for retirement, paying for your kids’ school, or saving a down payment on a home. Having this knowledge will help you choose SIPs that are appropriate for your goals and time frame.
Spread Out SIP Investments to Achieve Particular Goals
Don’t put all of your money in one location. Invest in SIPs that are customized to achieve particular financial goals and offer a range of asset classes and risk profiles to increase portfolio diversification.
Assess Your Ability to Take Risks
Each person has a different level of risk tolerance. To ensure a relaxed and enjoyable investing experience, choose SIPs that correspond with your level of risk tolerance.
Choose the Correct Fund Type
There are many different SIP choices available, and each has a different risk profile and investment goal. Select SIPs that are in line with your objectives and risk tolerance and concentrate on assets such as debt, equity, or hybrid.
Cost Ratio
The fee that the fund house charges you for having your SIP managed is shown by the expense ratio. Select SIPs with a lower expense ratio if you want to efficiently maximize your returns.
Start with Moderate and Consistent Investments
To start making SIP investments, you don’t need a large sum of money. Start small and make regular investments to develop a disciplined savings habit.
Remain Committed and Have Patience
Investing requires patience and a sustained commitment. Remain consistent despite market changes and stick with your investment to potential growth in the long run.
CONCLUSION
To summarize, Systematic Investment Plans (SIPs) are a useful tool for investors who are looking for an easy, disciplined, and long-term approach to building wealth. Mutual Fund SIP offer several benefits, such as rupee cost averaging, disciplined investing, flexibility, affordability, and diversification, which make them an excellent option for a wide range of investors. The article also highlighted the top Mutual Funds for 2024 that are worth considering. It provided insights into their investment objectives and performance.
