Finance Blog

HOW TO GET A GOOD RETURN ON YOUR EQUITY MUTUAL FUNDS SIPS?

Everyone wishes to get the most out of their mutual fund investments and always desires investment instruments that offer capital appreciation, good liquidity, significant returns, tax efficiency, and serves their goals and objectives of the portfolio.

Yet, one cannot guarantee the volatility associated with market conditions, social, and geopolitical changes in the country. Keeping these in mind, a lot of investors invest in equity mutual funds via SIP. It has become an instrument of choice for long term investing.

What is SIP?

Systematic Invest Plans, also known as SIP, are a medium to invest in mutual funds. SIP investments are easy to maintain and have the potential to generate good returns over an extended period of time. Under an SIP scheme, a fixed amount is invested at predetermined intervals for a given period of time.

Here are a few tools that can make your investments more productive the SIP way.

  1. Start early

Remember, the power of compounding works its magic when invested for a long duration. So invest in SIP in the early stages of your life to reap the maximum benefits from the compounding effects. 

  1. Try to ignore the volatility in the markets
    The economy and markets are hardly in a steady state. They are bound to experience their highs and lows over time. Government policies keep evolving constantly. However, this does not mean that investors should stop investing when the markets are at their lows. In fact, a down cycle can work in favor of the investor and fetch significant returns. Investing in SIP frees you from worrying about the lows and ups of the market. As you automatically invest in mutual funds despite the condition of the market.
  2. Use multiple routes 
    It is always advised to create a separate investment plan for your different goals. The elementary idea behind creating a separate portfolio is that it provides a sense of direction to your mutual fund investments. In short, partake a financial plan, and invest according to your financial goals. For your short-term goals such as planning a vacation or paying for tuition fees, consider investing in debt mutual funds. For your long term goals like your child’s higher education or marriage or your retirement, make sure you choose equity investments.

Additionally, you can use an SIP calculator to understand the returns generated over time. An SIP return calculator is useful to gauge the required monthly investment amount to meet your long-term financial goals. Using a mutual funds return calculator is quite simple. You just need to input your investment duration, expected rate of returns, and your total corpus to be generated. The calculator will provide you with an estimate monthly investments to be made in your preferred mutual funds. Happy investing!

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