Monday 20 May 2024
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Factors to Consider Before Investing in SIPs

Factors to Consider Before Investing in SIPs

Systematic Investment Plan or SIP is a mode of investing money in the mutual funds in a smart and convenient manner. Investors call it a revolution in the field of investment plans. It is one of the most baffling investment plans. Generally, the new investors are quite cautious of using SIPs because of the confusing nature of these investment plans. Many times it is seen that even the experienced players in this field who have the right knowledge of the SIP calculator, struggle hard in getting their strategy right. Such is the nature of the SIPs.

Increasingly, people all over the world are getting attracted towards investing in SIPs as they promise much higher returns even for the small amount of money invested. Another reason for the increasing popularity of the SIPs is the ease in investing in these mutual funds. SIP calculator plays an important role in helping the investors to know the returns.

Through this article, we will tell you about some of the factors that you should consider before investing in a SIP so that you can get the desired results.

  1. Expense ratio of the company

Before you invest in any SIP you should check the expense ratio of the company. It is the expenses that the mutual fund company has incurred to keep its mutual funds operational. A company which has a high expense ratio can give you higher returns. Every company has a different expense ratio for different types of funds. Many mutual funds companies like the upwardly, also advise you the same through their SIP calculator.

  1. The age of the mutual fund scheme

The older you get, the better you get. This holds true even in the case of SIPs. Always choose a company after knowing about its years of operation. It is always better to invest in a fund which is at least 5-6 years old because till then it will have gone through the bearish and bullish cycles of the financial markets.

  1. The corpus of the mutual fund

If a mutual fund company has a higher corpus it will surely give you higher returns. Even the SIP calculator reinforces the same result. Also, having a higher corpus fund shields your invested money from the external factors and saves you from the risk of being defaulted. It is advised by our experts to look at the corpus of the company along with the other factors that we generally see the performance, ratios, etc.

  1. Performance and returns of the fund

You need to study the fund thoroughly before you invest your money in it. Make a list of the prospective funds to study and compare their performances over the last 4-5 years. It will give you a clear picture of the company and how it has performed with respect to the market forces. Always choose that fund which has been able to give a balanced performance. It is the safest to invest your money. You can even use the SIP calculator tool to calculate the expected returns.

  1. The instalments of the SIP

SIP is a long term investment. Therefore, it is better if you calculate the instalments in advance. It will keep you prepared to pay them from time to time. Many websites provide SIP calculator to calculate the instalments. You can make use of this SIP calculator.

Do not just rush to invest your hard earned money. Take a break and weigh each and every consequence. SIP calculator can be of great use to you.

Good luck for your investment.