Mutual funds are your best shot at earning long term capital appreciation. Right now, there is no other scheme like mutual funds that is giving you high returns at the same time offering active risk management. To ensure that you are investing in the right type of mutual fund scheme, investors should understand the investment objective of the scheme and make sure that it aligns with that of theirs. If you are good at financial planning, then you might not take long to assess your goals and diversify your investment portfolio accordingly. Depending on your risk appetite, you can decide how much of your portfolio should consist of equity component and how much capital should be allotted to debt schemes. The standard and the most basic portfolio diversification stand at the ratio of 80:20 where majority is allotted to equity investments while the remaining is invested in debt. That’s because equity as an asset class is known to have a high risk returns trade-off whereas the debt element provides the necessary cushion in the falling markets.
In a world where fixed deposits are losing its charming and looking at the falling interest rates, mutual fund schemes look a feasible option at the moment. And to ensure that you save and invest a fixed amount without breaking the loop, consider starting a monthly SIP in a mutual fund scheme of your choice.
What is SIP?
Systematic Investment Plan is a great initiative taken that gives almost everyone a chance to try their luck of creating wealth through mutual fund investments. Now people from all walks of life, irrespective of how little they earn, can invest in mutual funds via SIP.
What happens you start a monthly SIP is that every month on a fixed date, the predetermined SIP sum is debited from the investor’s savings account and units are allotted in quantum with the SIP sum. However, to allow auto debit investors need to instruct their bank so that you do not have to make manual investments every month. Investing in mutual funds via SIP is so easy that you can invest even from the comfort of your home or office. All you need is a laptop or a smartphone and a decent internet connection so that you can navigate to the fund house’s SIP section and start the investment process.
What is the minimum SIP sum?
Although there is no upper limit for SIPs, they do come with a minimum investment amount. However, the minimum investment amount of a mutual fund scheme may vary from scheme to scheme as well as from fund house to fund house. Tax saving schemes like ELSS come with a minimum investment amount of Rs. 500. Yes, it is now possible to save tax and earn long term capital appreciation by investing regularly SIP with such low Systematic Investment Plan is a great initiative taken that gives almost everyone a chance to try their luck of creating wealth through mutual fund investments. Now people from all walks of life, irrespective of how little they earn, can invest in mutual funds via SIP sum.
The minimum investment amount is always mentioned in the SID (scheme information document). The SIP sum which an investor chooses can be equal to but cannot be lesser than the minimum investment amount mentioned in the SID.
Mutual fund investments do not guarantee returns, but to create long term wealth one can continue investing in mutual funds via SIP for the long run.
