Guide To How To Invest In SIP?
Finance 266

Guide To How To Invest In SIP?

Guide To How To Invest In SIP?

Systematic investment plan or SIP as we know it is an investment scheme that is offered by many mutual fund companies. It basically revolves around the idea of allowing one person to invest a considerably small amount of money in periodic installments which is quarterly, weekly or monthly, into the selected mutual fund. The working principle of SIP plans is very similar to those of recurring deposits however the returns are dependent on market forces. Steps to follow on how to invest in SIP?

Step 1: Understanding the amount of risk you can bear

In most cases it seen that people desire to have higher returns and advantages, in such cases they invest much more, and hence they should be well prepared in case the investment fires back. The people who have other financial obligations should be careful when taking such risks as it might happen that you may lose money. Therefore analyzing your own risks is a very important step before investing in SIP.

Step 2: Selecting the Mutual Fund

It is important that you get the right support at the beginning therefore finding the right agency is beneficial. Study suggests that the best way to select a mutual fund agency is by keeping in consideration your risk profile and also the returns you would like to receive in the long run. This is one of the major aspects of how to invest in SIP and should be taken seriously. After selection of agency you are required to submit your KYC form which will take the process further. When you select the short term, middle term or the long term investment plans, you should be aware that you must be able to take care of the leaps as well as the fall, if any, in the rate and overall amount of the plan.

Step 3: Determining the amount of your SIP

The nest important step in investing for SIP is concluding the amount you would wish to invest for your plan. For deciding the amount there are various sources from which you can take help. First one of course being taking the help if your finance manager. Second one is calculating the amount using a SIP calculator.

Step 4: Deciding the basics

The last step for how to invest in SIP is deciding the date of the month you would like to make the payment and then the duration for which you wish to carry on with the plan.

These steps are extremely important for the smooth functioning of your investments.

The author is an economics student and has found the finance sector always interesting. The author also has a keen interest in the writing field. He has written numerous articles in finance books and journals about how to invest properly in systematic investment plans.

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Finance 266