Mutual Fund

Secrets of profitable SIPs

The game of the market seems very volatile. Many investors come to the market in order to make a huge profit.  But only few of them can do that, so eventually many of them face the loss. There are many things written in various books which say we should invest for long term but when you saw your money getting spoiled in the market you can’t have the patience to be disciplined. Of course equity can give you massive returns in compare to bonds or any other investments, but equity has the most amount of risk. It is true, but you can’t learn without having loss. So it is very important to invest in equity but we should not do it directly, we should invest in mutual funds to invest in equity, because mutual funds will give you high return with low risk compare to direct equity. And the other thing is you can start your investment journey with 500 rupees with the help of SIP. There are some steps to ensure your good returns by SIPs.

The shorter period causes higher losses:-

                   In many market and education studies, it has been noticed that if you invest for short period subsequently it will increase your possibilities of loss. The chance of making loss in 1st year is nearly about 23%, while in 2nd and 3rd year it is about 14 -16%, after five years it goes to 3.3%. And after 10 years it comes to 0.3% which means there are almost no chances to make loss. Why does it happen? Because the bull markets in India stay for 2-3 years at a time, so eventually after 3 years market starts to recover itself, that’s why SIP can do better performance in long term.

The benefits of various SIPs:-

Many investors think that you can’t earn good returns in SIPs, but it is not true. There are so many types of mutual funds in the market like equity funds, debt funds, hybrid funds which is a mixture of both equity and debt. So returns of the investment vary on the type of mutual funds. Equity fund gives you more returns like shares, but debt fund gives you more security, where hybrid fund gives you high return with low risks. So it depends on you what kind of return you want to get!!

The benefits of longer SIPs:-

          Another benefit of SIP is compounding. According to Albert Einstein compounding is the eighth wonder of the world. Let’s take an example here; if you make an SIP of 1500 per month at 12% annual return for 15 years. It would be 7.5 Lacs. But if make the same investment for 25 years, it would be 25 Lacs, but after 35 years it would reach to 83 Lacs, so it takes 25 years to make 25 Lacs but it only takes 10 more years to make more than double of it.

The benefits of bear run:-    

The analysis shows that even bear market is helpful to SIP holders. Many investors get worried about bear market, but for the SIP holder it can be a boon. Let’s take an example, if you have invested in an SIP of 1500rs. Basically a unit means part of a stock. If the price of a unit is 100rs, you would get 15 units. But in bear market the price of the stocks

Related Posts