sip Or systematic investment plan is one of the best ways Investment In mutual funds. Investors can set aside a pre-determined amount in a scheme for a specified period on a certain day of the month. Units are allotted for the amount invested in each installment. There are certain factors to be kept in mind while selecting the plan for SIP.

determine risk appetite
First, assess your risk taking ability. Schemes can be differentiated into low, medium or high risk, depending on the type of securities and asset classes in which they invest. For moderate risk appetite, it makes sense to invest in balanced funds or diversified large-caps. share Fund.

Identify financial goals
Second, identify the target for which you want to start the SIP. Once the target is identified, it is possible to decide the type of plan, duration, frequency and amount of SIP. A financial goal can be anything like education of children, marriage, buying a house etc.

plan performance
Third, assess the performance of the scheme in one year, five years and since its inception, in comparison to the benchmark index as well as peer funds. The plan should have consistently performed well over a given period.

credit of fund house
It is important to check the creditworthiness of the fund house. The fund manager, the assets managed by the fund house, the AUM of the scheme are important indicators that you should pay attention to. A long lasting process-driven fund is likely to deliver consistent performance.

Cost

The expense ratio of the fund and the load charged at the time of redemption are also important factors that should be kept in mind while selecting the scheme.

things to note

• Consult a SEBI registered investment advisor for help in choosing the right plan.
• Check fund fact sheets, portfolio statements and websites that track fund performance.

(Content on this page is courtesy of Center for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Aarti Bhargava and Labh Mehta.)