How to maximize your returns from SIP or Systematic Investment Plans?

Fund houses in the USA will allow making investment on certain dates of the month. If you are holding multiple SIPs, it would be better not to make payment for them in a single day. You should try and stagger the payment all through the month. This way, you can enjoy liquidity in your savings as the money is not drained out completely. You also tend to negate the effect of adverse movement of market. If you have been considering SIP investment, it is important to know certain investment facts. This will maximize the returns. The component of general finance, SIP, gives tremendous opportunity to make money. Let us check out the tips.

  • It is true that monthly payment has to be made but you must set up yearly investment plan. In fact, there is no need to stick to the fixed amount which has to be paid every month. You must try to ensure that SIP amount increases with your income in proportion. To keep pace with inflation and your changing lifestyles, adopt step-up approach in systematic investment plan. The surplus amount can be directed to the existing funds rather than on new ones.
  • Your withdrawal and transfer plan must be completely systematic. It is true that one needs to have in the bank sufficient amount for monthly SIP transfers but it is not necessary to have that in lump sum. You will not enjoy high returns by having big amount in the bank. It is recommended you put lump sum money in your liquid fund and offer instructions for transferring fixed amounts. Liquid fund will fetch higher returns and thus it is advisable you ask for the transfer of fixed sum to your chosen equity scheme. When you reach financial goal, choose SWP for withdrawing your money at regular intervals.

Invest For Market

Try and invest for the entire market cycle and do not terminate. There are many individuals who make the mistake of starting SIP for mutual funds and then terminating it as soon as the market declines.


Defeats The Purpose

This should be avoided at any cost since this defeats the purpose of SIP investment altogether. When you exit from the market, you forgo the opportunity of buying more mutual fund units at lower cost.

If you stay all through the market cycle, you can average out your purchase cost over the period of time.

  • It is crucial to link your SIP investment to the financial goals. Link your investment to any of the specific goals. To avoid investing in a haphazard manner, invest with some aim in the mind. Make a list of goals and fix some time frame for their realization.

SIP must be undertaken over a long term horizon. The systematic investment option lets you create a lot of wealth if you are patient.

The amount you invest is fixed and what changes here is just the asset value. Here you need not invest the amount in lump sum.

To invest in a disciplined manner or instill discipline in your investment, you must consider SIP.