SIP or Systematic Investment Plan is the key means to put money into a safe and reliable money growing ventures through which good returns can be reaped. The key benefit of SIP is that it offers so many types of investment opportunities, giving people the chance to put their money into various schemes through which it can grow and multiply in many different ways.
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Types Of Mutual Funds
Knowing what type of funds are available helps to invest wisely into those funds through which your financial goals and objectives can be achieved.
- Money Market Funds - It is made up of short term securities like treasury bills, income securities, deposit certificates etc, gives low returns but a safe investment
- Fixed Income Funds - Made up of investments that gives fixed returns such as high yielding corporate bonds, government bonds and investment grade bonds.
- Equity Funds - They comprise of stocks, have short investment period, carry high risk, but grow faster than other funds. Examples include value stocks, small-cap stocks, income funds etc.
- Balanced Funds - Made up of fixed income securities and equities, are more risky than fixed income funds but less risky than pure equity funds. Their purpose is to balance high returns against risk of losing money
- Index Funds - They track a particular index's performance and the fund's value is likewise affected by the index value.
- Specialty Funds - Is made up of investment into specialized assets such as commodities, real estate etc. returns are good and investment risk is low to moderate
- Funds of Funds - Investment into funds that comprises of various other funds, enabling the investor to get greater choice on how they can invest their money and multiply it
By looking into the general features of these fund varieties, you can decide what is the best SIP plan to invest.
Tips On What To Check Before Investment
By looking into funds that have different investment styles, you can gain good returns because even if a particular segment is not performing well, its low returns will be made up by others that are doing moderate to good in the markets. This feature also helps you diversify beyond just investment type as you can access more investment avenues. The best SIP plan to invest is one that is performing well now and also shows signs of performing this way in the near future.
Before picking up any fund for investment, look into how its returns will help meet your specific financial goals. For example, do you want returns that helps meet financial obligations such as college expenses, buying car, meeting home renovation expenses etc else is the returns needed for retirement purposes. So look towards a fund that can resolve such needs.
Check up on the risk of a fund and how much of risk you are ready to take on. For example, is putting your money into a portfolio that has dramatic swings alright or do you want a more conservative investment means. Kotak Mutual Funds offers investment options with low to medium risks through which attactive returns can be gained.
Finally, look into how long you don't mind putting money into investment. Is the money invested required for immediate and pending financial obligations else can you wait for a long period of time till It gives back significant investment returns.
Gain High Returns By Investing Into Equity Funds
You can maximize gains from SIP investment with a little amount by putting money into Equity funds. Here investment is made into different company shares but each have a different market capitalization. You can enjoy significantly greater returns from them than what is obtained from money put into fixed deposits and debt funds. Check out Kotak Mutual Funds for the best returns in both short and long term investment periods.
This form of mutual fund investment is ideal for those who want to invest just a moderate amount of money per month, are having long term financial goals and who are ready to take on a bit of risk in their investment decisions for the benefit of a high returns at the end of the investment period.
Those who are new to investing should look into large-cap equity funds which put money into top 100 stock market companies, which deliver good returns over the long period. Investors who are already aware of the mutual fund scenarios can put money into more diversified mutual funds, which have the benefit of high returns plus low risk.
In equity funds, investor money is put into company equity shares in different proportions. Here about 60 percent of the fund is put into such shares and the investment style can be either growth-oriented or value-oriented. The remaining 40 percent is put into money market instruments money marketing and debt instruments, which helps to bring down fund risk as well. All the buying and selling decisions of this fund is done by the fund manager, who takes decisions based on market scenarios so that investors can gain maximum returns.
Key Benefits Of Investing Into Equity Funds
- Invest a small amount for a period of three years and gain good returns when the investment period culminates
- Investment can be made conveniently into various types of equity funds at a low cost, thus eliminating the need for huge money to make equity investments
- As money is systematically invested, returns are high and the discipline of making monthly investment is gained
- Investment can be made through the services of a fund manager or directly online which is simple, easy
- Funds put their money into companies that offer various returns, which brings in diversification that offers good returns
- Lumpsum investment can be made for a period of time, if making monthly SIP is cumbersome
Types Of Equity Funds Based On Market Capitalization
- Large cap - Investment is made into reliable large cap company equities
- Mid cap - Investment is made into well-performing midt to large cap company equities
- Mid and small cap - Investment is made into top mid and small cap company equities
- Small cap - Investment is made into best small cap company equities, which due to their small size can give back fluctuating returns
- Multi-cap - Investment is made into top, mid and small cap equity companies
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