Investing in SIP mutual funds has actually become quite popular nowadays. The mutual funds are created when many corporations' pool in the securities to make a fund. The biggest benefit of a mutual fund is investor will be able to minimize their risks by diversifying their assets. So, loss in one investment hopefully can be covered up by profits of another. The stock market will fluctuate suddenly and can cause heavy losses or high returns that depend on the situation. Diversifying your portfolio means reducing your risk of loss just by distributing all your investments than keeping your eggs in just one basket. This is precisely why the mutual funds provide wonderful investment goals.
What’s a SIP?
SIP is one specific amount that is invested for a long period at the regular intervals, normally on the monthly basis. With this method, the investor buys some units of the scheme at the pre-decided frequency. Systematic investment plans help the investors to participate in a stock market, prevent any need to time a market, and bring discipline to the investment methodology. Now, it is possibly done with the mutual fund investments as well. SIP or Systematic Investment Plans help you to invest the fixed amount each month or quarter. Therefore, it helps to spread our investments with time.
Features of Systematic Investment Plan
For the long-term wealth formation in the equity market, you require long-term horizon and discipline that are inbuilt features of investing in SIP. Following features of the SIP will make this fit for the equity market.
Investment possible with the small amount of money invested often to accumulate wealth
The easy and disciplined way towards investment
Flexibility in the terms of Quantity or Amount based SIP
Flexible intervals such as Daily, Weekly, Fortnightly or Monthly basis
Based on Rupee Cost Averaging concept
SIP is quite beneficial and best investment option. Let us see why:
Discipline: More you invest, better will be your chances to get success in the long-term. It includes investing a little early on in life. But, it is very tough to form a habit. You might end up in over-spending and forgetting to invest. But, SIP will help to inject discipline and invest regularly. As SIP will automatically debit money from your account, so you do not have any chance to forget your investment.
Power of compounding: There’s one reason why you’re advised to invest very early. When you will make an investment, you will earn profits in terms of profits from the sale/dividends or interest payments. The first one will get credited in your bank account, and where they then will earn the interest. With time, you will make interest on the interest payments as well. It amplifies your profits. For this reason, many investors prefer to reinvesting the interests and profits instead of using this for expenses. But, SIP helps you to tap in this power of compounding just by increasing the duration of your investing, although it is in the small amounts.
Choose your investment: With SIP, you may tailor your investments that will fit your profile. Also, you can choose the scheme, amount you are looking to invest and a number of Kotak mutual funds units that you want to buy. Suppose you fix an amount in rupees, the number of units that you buy every month may change. In the same way, if you choose to buy the fixed units, the amount you will pay every month might differ. In any case, it will fit your bill.
Cost averaging: It is one key benefit of SIP. In a stock market, one thing that is very important is timing. Same stock or mutual fund will be available at the different rates on the consecutive days and months. SIP helps you to reduce the average investment cost.
Small investors: Often, there’s the minimum threshold when investing in the Kotak mutual funds. It can differ from one fund to another. It can act as the barrier for the small investors. With SIP, you can start with as small as 500 or 1,000 Rs.
Best SIP Mutual Funds in 2019
SIP is one highly efficient ways of investing in the Kotak Mutual Fund schemes. With SIP, you can automate your investments every month. You can also spread your Kotak Mutual Fund investments with time in the fixed monthly installments. Thus, you can easily invest a small amount every month at the regular intervals and accomplish your goals.
The goals can be marriage, retirement planning, purchase of a car or house, can all be fulfilled just by taking a SIP route. Because of its investment style, systematic investment plan is the best tool for investing in the equities. It balanced pitfalls of an equity market. It makes sure complete stability during the turbulent market conditions. Some benefits of SIPs include:
Power of Compounding
Rupee cost averaging
Builds the habit of the long-term savings
Investors who are very keen on investing in a SIP, then Kotak Mutual Fund is the best option for the year 2019. The funds are shortlisted by undertaking some parameters like NAV, AUM, peer average returns, past performances, and more.
Choosing Right Companies for Your Investment
When you've decided to go the SIP way, then the next question that comes up is a stock selection. Number one rule is going for the companies that you would like to own when given a chance. There are some stocks that are good for SIP way of investing. And these are the stocks we must accumulate, in the small steps since they represent the long-term value. They’re companies that have the proven track record. Such companies have the solid, ethical and stable management and function in the profitable area with the long-term prospects.
Conclusion
Suppose you don’t want to invest for equity SIP then you can select the Kotak Mutual Funds where you will be relieved of individual company research. Thus, the points mentioned will help you to opt for the right mutual funds and make a worthwhile decision.
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