Sytematic Investment Planning (SIP) . SIP option of investing is available with all the mutual funds. SIP is an ideal way of investing for the retail investor especially for investing in equity funds.
1. A method of investing regularly to benefit from the stock market volatility.(Cost averaging )
2. Regular- Similar to Recurring Deposit.
3. Automatic investments, one-time instruction, auto- debit facility from your SB account (Convenient and Hassle-Free)
4. Forced saving – you can easily fall into the pattern of Earn- > Save -> Consume intead of consume and then save.
Overall, an SIP is a simple device that helps you to save and invest in a disciplined manner without having to time the market.
1 comment:
For a more informed investor who has the time to research, I would recommend selecting mutual fund schemes to invest in based on the following criteria.
1. Longterm Performance , consistency in Returns
2. Short Term Performance (though a fund has performed well in the past, is there a let down in short to mid term performance)
3. Performance across market cycles, like during bullish and bearish phases (how well did the fund perform during the bearish phases)
4. Fund Corpus (When selecting midcap funds, the corpus size is very important)
5. Fund Managers performance with the scheme(If a fund just got a new fund manager, I would observe the performance under this new manager before I select the fund)
6. For equity mutual funds, one will also need to evaluate risk. (Exposure to midcaps, Standard Deviation of the fund)
7. For debt mutual funds, apart from risk one also need to examine entry/exit loads and expense ratio are very important.
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