An overview about SIP plans

SIP is a plan that allows you to save in a regular manner, so that in terms of need you have access to surplus funds. Best sip to invest is a good idea as it enhances financial security by following a prolonged plan. Such a plan works out to be beneficial for a salaried individual where they can churn in a portion of the fund to the investment plans that can be saved for later use. Rather than spending a major portion of the salary you can set it aside and put it to use at a later date.

Research showcases the fact that only a mere 2 % of Indian population invests in mutual funds. For this reason it is important for the people to figure out the mechanisms of investing in mutual funds that paves way for a safe investment and an entry on to the investment market.

More about SIP?

The onus is on an investor to opt for a SIP plan on a weekly, monthly or yearly basis. The emergence of online payment system has negated the problem of SIP to a considerable extent. With the aid of online payment your SIP is deducted in an automatic manner.

As per financial experts investment in SIP is always a better idea since it is easy to handle. From your salary account a portion of the money is deducted and accumulated on to the SIP account. But to invest in mutual funds there are some benefit formula you need to consider

  • Rupee cost of averaging- the nature of investing in mutual funds seems to be a dicey affair. So based on the formula of rupee cost averaging it is better to invest in mutual funds. This means that the money you have gone on to invest will enable you to purchase more units when prices are low and when the units are high to purchase few units
  • Powers of compounding- any investment in mutual funds not only provides you viable returns in the form of savings but on your principle amount you can also end up earning compound interest. For example if you are planning to invest for 5 to 6 years, then you can benefit from investing a higher amount of money as compared to investing for 1 or 2 years. In fact this power of compounding works out to be beneficial for an investor who has made their foray into the domain of mutual funds at an early stage.

To opt for the best mutual fund plan you need to discuss with your financial expert and evaluate all the returns over the past 5 years. It is on expected lines that some funds would be performing much better than the others. Do discuss with them and obtain their view points on which type of fund would be most suitable for your needs. Even a simple search on the internet would present you with a plethora of options in terms of funds where you can plan to invest.

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