Mutual funds are a great tool of investing your surplus money particularly in the schemes which suit your investing needs. Read my article to know more about mutual funds.

We all save some money throughout our life to cope with unusual events or to fulfill our future needs. But, small savings instruments (money that is invested at a fixed rate) are not sufficient to accommodate the requirements. The only reason being, these savings do not provide returns on the amount deposited recurring account, postal account or in the bank FDs.

On the other hand investments in the mutual funds, by and large, brings the required money which has been invested in them. Since the inception of mutual funds, it has been very easy to invest money and build wealth. Here are some useful mutual funds investing tips that can help you to multiply your money.

1) Invest via SIP (Systematic Investment Plan)

The popularity of SIPs (Systematic Investment Plans) has gone up in the last few years. SIP is the most preferred investing method which would let you invest your money (starting as low as INR 500) at the regular time (any day of the month) for a stipulated period of time.

Why should you start SIP?

One, it imparts financial discipline to your life.

Two, SIP helps you to invest regularly without tussling with market mood, index level, etc.

Three, systematic investment will give you the cost of an averaging benefit.

Four, let you enjoy the power of compounding. When you invest over a longer period and earn profits on the profits earned by your investment, your money would start compounding. This helps you to build a strong corpus with regular small investments.

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On the flip side, if you invest a lump sum amount, then it might not be possible for you get the benefits of the bullish and bearish market scenario, and you might not be able to get the maximum yields for your investments. Hence, to maintain the sweetness of your investments, invest through monthly SIP in your selected schemes mutual fund scheme.

2) Make Long-Term Financial Goals

Various types of mutual funds exist to cater to different needs of different people. Largely, they are of three types; (1) Equity or Growth Funds, (2) Income or Bond or Fixed Income Funds, and (3) Hybrid Funds. All these schemes are specially designed to attract peoples from each and every segment to actively participate and invest in mutual funds.

The investment in mutual funds also facilitates the clients to invest in short-term schemes, but the return on investment from such a plan is not at par as compared to that of long-term investment. Financial Planners are of the view that “if a person is investing to achieve a short-term goal that needs to be achieved in a couple of years, he/she should invest in debt schemes (because when you have a short-term goal (2 to 3 years), you should not expose your investments to unnecessary risk.

On the other hand, if you have a financial goal that needs to be met after five or 10 years, you can surely bet on equity mutual fund schemes to achieve them. Equity, as an asset class, is considered ideal to meet long term goals because it has the potential to offer far better returns as compared to other asset classes over a long period.

Simply put, it is advisable that individuals must aim for investing over a longer time (10 years and more). The long-term investment will help you to bring out the maximum gains from your investments.

Read this: 7 Mistakes Every Small Investor Often Commits

3) Monitoring The Existing Investments

Though it is said that investment in mutual fund provides returns in the long run, still one should not just invest and forget. Unlike stocks which need regular monitoring, a mutual fund portfolio can be reviewed once in 6 months. Keep in mind that a timely review of the portfolio is required in order to maintain the balance of returns. Know more about how to track the performance of your mutual fund.

There are fund managers who allocate the funds wisely and ensure the returns to the clients. However, it is the responsibility of the clients to carefully spot the difference between the promised and the actual returns because it is your hard-earned money that has been deployed and not anyone else’s.

4) Eliminate The Under-Performers From Portfolio

As mentioned earlier, the clients should review their portfolio at regular intervals and discard the mutual funds which are not productive. It is essential to clean the mutual portfolio at regular intervals as the non-productive schemes will result in wastage.

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Mutual funds can help you to become a millionaire provided that you follow the rules set by your financial planner or any experts. So value the importance of your money and make the maximum use of it.

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Disclaimer: The contents and data presented here are just for your information & personal use only. While much effort is made to provide the information, I (Vishal Dalwadi) or “Finblab” do not guarantee the accuracy, correctness, completeness or reliability of any information or data displayed herein and shall not be held responsible.

The post Mutual Funds Investing: 4 Tips Can Make You Millionaire appeared first on Upcoming ipos: Latest news on stocks, economy & finance.

Everyone is aware that only money has the power of creating monies. Hence, the savings that we owe are the sources of reaching the financial goals and SIP – Systematic Investment Plan is the route for the same.

What is SIP – Systematic Investment Plan?

SIP stands for the Systematic Investment Plan, is a smart way of investing in the Mutual Fund. With systematic investment plans, the investor gets a chance to purchase units as per the decided date that is given every month so as to go ahead with a certain investment plan.

SIP – Advantages to the Investors

• Investor Can Start With A Small Amount: One can start putting his/her money into Mutual Funds with just INR 1000, via SIP, which does not cause huge burden.
• Periodic Remittance: As per the nature of SIP and its functioning, it requires the amount to be payable on a periodic basis say monthly and thus, helps the investor to plan his/her monthly expenditure.
• Auto Debit Facility: Once the investor is enrolled with the AMC (Asset Management Company) to invest in the SIP, he/she associates his/her bank account with the same and the amount of investment is debited from there accordingly, in a hassle-free manner.
• The Power of Compounding: When we make an investment, we receive the interest on the invested amount on some specific rate. It may be either (1) a simple interest rate or (2) a compound interest rate. In Systematic Investment Plan, investors fetch the return on the compound basis. For example, you invest INR 10000 @ 10% simple interest for 5 years. At the maturity date, you will receive an amount equal to INR 15000 (10000 Invested amount + 5000 Interest). While, in the case of compounded interest rate, the maturity amount will be INR 16105 (10000 Invested amount + 6105 Interest). Accordingly, Systematic Investment Plan is more beneficial to the investor.
• Rupee-Cost Averaging: Every scheme under the Systematic Investment Plan has a NAV (Net Asset Value), which is basically the unit price of that scheme, on the basis of which the units are allotted to the investor. Lower NAV means more units and vice versa. As the NAV of the scheme changing on a daily basis, every time the money of the investor is put into the plan, he/she gets a different number of units every time. Thus, the average cost of investment reduces. Hence, the investment in SIP is low-cost in comparison with others.

SIP – Also Provides the Following Benefits

• Convenience
• Diversification
• Flexibility
• Tax Savings
• Wide Selection

How SIP Benefit As Compared To One Time Lump-Sum Investment

• Let’s take an example of 6 months SIP investment only. Investor one invests INR 6,000 in a single/lump-sum investment at NAV value of 10 (600 Units), while investor two invests in SIP of INR 1,000 every month, where he gets a different value of NAV (such as 10, 11, 9, 8, 8, 11) every month. So the investor two will get average NAV (10 + 11 + 9 + 8 + 8 + 11)/6 = 9.5 (631.579 Units).
• Now at the end of the six months, both investors redeem their money at NAV of 11. In this case, Investor one will get INR 6600, while investor two will get 6947 (347 more than investor one).

Above example is only for 6 months SIP investment, while for a longer period of investment says 15 or 20 years, the return will be huge as compared to the lump sum investment. This is the power of SIP.

If you are really interested into investments via Mutual Funds you can think about systematic investment plans. With such an investment you can manage your investment amount rather than be caught up with the ups and downs in the markets.

Disclaimer: The contents and data presented here are just for your information & personal use only. While much effort is made to provide the information, I ( Vishal Dalwadi ) or “Fin Blab” do not guarantee the accuracy, correctness, completeness or reliability of any information or data displayed herein and shall not be held responsible.

The post Systematic Investment Plan: How Advantageous It Is For the Investors appeared first on Upcoming ipos: Latest news on stocks, economy & finance.