Know these 5 things before investing in SIP Mutual Funds

Investing in SIP is ideal for investors who want to yield good returns with a regular and disciplined approach towards investment. It allows you to avoid lump sum deposits and further mitigate the risk. 

One of the key benefits of investing in SIP is that it is a flexible option that allows you to determine the terms as per your convenience and requirements. However, you should know the following facts to make informed decisions. 

Define Your Investment Goals

You can start an investment in an SIP mutual fund for any of your financial goals, including children's education, retirement, wedding expenses, and more. The amount you need to fulfil these goals and the timeline will vary. 

So, determining the objective before investing is important in creating a strategic investment plan. Based on your goal, you can finalise the investment terms that will help ensure you have the required funds on maturity.

Determine Your Investment Amount 

Your investment in an SIP mutual fund can begin with as little as ₹500, and the maximum can be as much as you want. This gives you ample flexibility to choose an amount that fits your monthly budget. By investing the right amount, you can ensure you are not short-handed at the time of maturity.

To understand your investment amount, you can use an SIP calculator. This tool allows you to get an estimated amount based on your investment horizon and expected rate of return. Remember to keep a buffer, as the actual return may vary.

Choose The Tenor Carefully  

Another crucial factor influencing your returns is how long you stay invested in the scheme. Investments are generally divided into three types based on tenor: 

• Short-term investment: 1- 2 years investment horizon 
• Mid-term investment: 3 - 5 years investment horizon
• Long-term investment: 5+ years investment horizon

You can decide your investment tenor as per your objective and likewise choose the right asset classes. You can use the compound interest calculator on the Bajaj Markets: EMI Calculator App to know the period you need to invest for to get the required funds. 

Identify The Risks Factors 

Investing in SIP comes with certain risks as the schemes are market-linked, and so are your returns. So, if you have a high-risk appetite, you can invest in funds that have a high-risk factor and vice versa.

Assessing your risk is crucial as it helps you choose the suitable scheme to help you meet your goals. It also helps ensure you can stay invested for the required term and do not make any hasty decisions during market volatility.

Monitor Regularly 

Tracking your investment progress helps you decide when the right time is to liquidate your assets. If you are investing in SIP for the short term, you must monitor the scheme frequently to ensure you exit at the right time.

If you have made a long-term investment, it is subject to economic factors and market changes. Thus, you must periodically check on it to stay informed and on track with your financial objectives.  In either case, remember to do thorough research before liquidating or withdrawing from your investment.

Benefits of Using a SIP Calculator 

Here are some key benefits you can enjoy when using the Bajaj Markets: EMI Calculator App compound interest calculator.

Helps Determine Investment Terms

As mentioned, your investment terms play a crucial role in the returns you can get. With the calculator, you can do this quickly and accurately.

Free of Cost

You do not have to pay anything to use the Bajaj Markets: EMI Calculator App and can use it without any restrictions. So, you can keep adjusting the values until you find the suitable terms.

Easy to Use

This tool is very uncomplicated, so you do not need to be tech-savvy to use it. Simply insert the basic details required and click ‘Calculate Now’ to get instant estimates.

Knowing all these facts, all you need to do is use the Bajaj Markets: EMI Calculator App to customise your investment in a SIP mutual fund. In addition, you can find other calculators on the app that can help you better manage your finances. 

These include loan EMI calculators, insurance premium calculators, FD calculators, and more. Download the Bajaj Markets: EMI Calculator App from the Play Store or App Store to streamline your financial planning.

Follow Ground Report for Environmental News From India. Connect with us on Facebook, Twitter, Koo App, Instagram, Whatsapp and YouTube. Write us on [email protected] and subscribe our free newsletter. 

Don’t forget to check out our climate glossary, it helps in learning difficult environmental terms in simple language.