This is because mutual funds are a pool of professionally managed funds that invest in multiple asset classes including equities. Investments made in the equity market take some time to show their true potential. Hence, it is advisable to start early if you are keen on achieving long-term capital appreciation through investing in equity-oriented schemes. Mutual Funds have gained traction among Indian investors in recent times and are gradually attracting the attention of more and more individuals. They offer active risk management, offer a diversified portfolio, and have scope for long-term capital appreciation.
However, you must first create a financial plan to determine your short term and long term goals. Once you know what you want to gain from your investments, you need to determine your risk appetite. This is because different categories of mutual funds invest in equity and equity related instruments, which carry relatively higher risk. Also, you may be aware of the fact that investments made in the financial markets do not guarantee returns. Therefore, before investing in Mutual Funds, investors must understand their risk appetite.
Fund houses collect money from investors for specific subjects and invest this pooled money in instruments depending on the objective of the scheme. Thus depending on the nature of the scheme the money is invested in different securities. Mutual fund investors are then allotted units as per their investment amount and the current net asset value (NAV) of the fund. invest in mutual funds through
sip, the abbreviation for Systematic Investment Plan, has become quite popular. However, the terms SIP and Mutual Fund are used interchangeably and many investors confuse them to be one and the same thing. The fact is that just as you have the option of investing in mutual funds in lumpsum or lumpsum, you can also invest in mutual funds using a Systematic Investment Plan. SIP is an easy and convenient way of investing in mutual funds, in which you invest small amounts in mutual funds on a regular basis. What’s more, investors can invest in mutual funds through SIP using a laptop or smartphone with a good internet connection. Instead of investing lump sum and exposing your entire finances to market volatility, you can invest small amount in mutual funds through SIP at regular intervals, thus making the most of market fluctuations .
Here are some reasons why investing in mutual funds through SIP is a good option:
You can choose the monthly investment amount
The minimum SIP amount will be mentioned in the mutual fund offer document. Depending on your risk appetite and investment objective, you can decide the SIP amount.
You can stop SIP anytime
Remember that even if you invest in a mutual fund that comes with a lock-in period, you are not required to continue investing in that fund till the lock-in period is over. The good thing about SIP investment is that you can stop SIP at any time. There are many factors that can prompt an investor to discontinue SIP. For example, if a fund you have invested in is not performing as expected, you can stop SIP investing in that fund and invest in another fund which has the potential to perform better Are.
You can modify the SIP amount
The beauty of SIP investment is that it allows investors to increase or decrease their monthly SIP amount. Suppose the fund you are investing in is giving higher returns than your expectations and you want to invest more on a monthly basis, you can easily do so by modifying the monthly SIP amount. Similarly, if you want to invest in a new fund and divert some amount to that fund, you can also reduce the monthly SIP amount.
SIP can inculcate the discipline of regular investing
Once you start a Mutual Fund SIP, every month a pre-determined amount is deducted from your savings account and transferred electronically to the fund. In this way, SIP is automatically saving a part of your monthly income and also helping you invest systematically in Mutual Funds from the comfort of your home or office. Thus, you save first and spend later, which is essential to become financially sustainable.
We have looked at some of the reasons why one may consider investing in Mutual Funds through SIP. However, if you need further assistance in making an informed investment decision, consult a financial advisor.
“This is an investor education and awareness initiative by Axis Mutual Fund. Investors need to complete a one-time KYC process. For more details visit www.axismf.com or contact us at [email protected]. Investors should only Should deal with registered mutual funds, details of which are available at www.sebi.gov.in – INTERMEDIARIES/MARKET INFRASTRUCTURE INSTITUTIONS section. For any grievance redressal, investors may call us at 1800 221 322 or write to us at customerservice@ axismf.com or register a complaint on SEBI SCORE portal.
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Mutual Fund investments are subject to market risks, read all scheme documents carefully.