Systematic Investment Plans (SIPs) have recently gained popularity among investors due to their effectiveness and simplicity. SIPs have completely transformed how individuals invest in securities by allowing them to start small and be disciplined about contributing regularly. But, with numerous mutual fund schemes available in the market, choosing the right one that offers maximum returns can be quite challenging. This is where the financial digital tool MF (mutual funds) calculator helps.
Here’s a guide to help you understand more about SIPs, factors to consider when choosing the best funds, the role of an online calculator, and tips for making smart investments.
Understanding SIPs
SIPs, or Systematic Investment Plans, are a disciplined way to start investing with a fixed amount in a mutual fund scheme at regular intervals. This could be done per your current financial situation, monthly, quarterly or annually.
Here’s why SIPs are most preferred:
- You can start investing monthly with a sum as low as ₹500.
- It allows you to buy more units of funds when prices are low and fewer units when prices are high, which can be beneficial in volatile markets.
- Take full benefit of the compounding and grow your wealth.
- Helps to diversify the portfolio by investing in other securities and earning high returns.
Choosing the Best Mutual Funds
To choose the best mutual funds for SIPs, here are the factors that you should consider:
- Financial Objectives: Assess your investment objectives, whether you are planning to save for long-term retirements or short-term needs.
- Risk Tolerance: If you can take risks, then go with investing in equity funds or choose debt funds for low-risk investments.
- Performance of the Past: Research and assess the past performance of the scheme to identify its future results and then make a decision.
- Use Online Tools: Make efficient use of digital tools like MF calculators to get an overview of the returns and align them as per your financial goals.
- Diversify Your Portfolio: To maximise returns, invest in different categories of funds, such as equity, debt, and hybrid funds.
Role of an MF Calculator
An MF calculator is an online financial tool that helps to calculate an estimate of the returns of the sum you plan to invest and make an investment decision. Here’s why you should use it:
- Helps to set financial goals and monthly budgets by providing an estimate of the required monthly SIP amount.
- Input different amounts of investment, tenure and expected rate of return to understand which scheme will work best for you.
- Make a comprehensive long-term financial plan that aligns with your goals and objectives.
Pro Tips for Smart Investing
To earn high returns out of your investments in mutual fund schemes, here are some tips to follow:
- Start early to enjoy the benefits of compounding.
- Stay consistent with your investments even when the market is not performing well.
- To minimise the risk, diversify your portfolio and invest in different types of funds.
- Review the performance of your investments and make adjustments accordingly.
- Focus on long-term objectives without getting involved in short-term fluctuations.
Final Thoughts
Investing in mutual funds through SIPs is the smartest way to grow wealth over time. By using online tools, you can make the right investment decisions and earn maximum returns.
Trusted platforms like Bajaj Finserv offer an opportunity for users not only manage their portfolios but also choose from 1000+ schemes. It’s a one-stop application to diversify your investments.
Remember to follow the above tips and start your SIP journey today!
