SIP investment: How to know if you are investing the correct amount?

Mutual funds investment plans have induced millions to invest in the money market. With plenty of lump sum and SIP (Systematic Investment Plan) schemes, almost every individual can become an “investor”. However, becoming a “wise investor” takes a lot more than just holding money in investment plans. You will get numerous opportunities to invest in mutual funds. Know more about mutual funds in terms of your expectations, risk-appetite and payability. Not all of us can make a huge lump sum investment just because a plan is highly profitable. So, SIPs seem like a better option in this case. If you have also been considering the same thought, there are few things you should get on your “to-do-list”.

Finding which plan is the most profitable and suitable one is the second task. The first one is determining the number of SIP investments. You have to do a simple permutation and combination taking all the variable factors into account. For doing this accurately, you should use a SIP calculator. Yes, you do not have to spend hours with a manual calculator and do all the number crunching. Use the most simple SIP calculator and get accurate results within a few minutes.

Tips to find the correct amount of SIP Investments

SIP investments are available in a range of plans and schemes. The minimum amount is as low as INR 100 per month while the maximum while there is no cap on the maximum amount. You can invest as much as you are willing to pay. However, whatever amount you choose to invest, you have to stick to it till the investment tenure expires. Thus, deciding the correct amount of investment becomes crucial to the investment process. Once you have a clear picture, there are plenty of high-performing SIP funds available to choose from. Just follow a few tips and tricks of investment experts to enjoy profitable outcomes in future.

Identify Your Needs

As an investor, you have to be very clear about what you are expecting from the SIP mutual funds. You cannot go about making random decisions without analysing the consequences of the same. Remember, just like every investment, SIPs also come with the risk factor. That is why you have to ensure a few things before stepping into the market.

  • Plan your budget and see how much surplus amount you can manage to invest every month. Some investors tend to take up a plan just because the returns are high and then fail to cope up with the expenses. You should not do the same mistake.
  • Identify your risk-appetite. This is vital as you have to know that if some kind of misfortune occurs, it must not affect your livelihood.
  • Know the purpose of your investment to decide whether you should take short-term SIP plans or long-term plans. The correct amount of investment would be the one that yields desirable returns within the defined time.

Take Help of The SIP Calculator

Once you know your budget and risk-appetite, a SIP calculator can help you get the job done in a few minutes. Several websites offer this online calculator that can help you with all the complex calculations in a few clicks. You need to sort out all the plans that suit your interests. Now, use the SIP calculator to get the estimation of returns from all the plans.

How to Use A SIP Calculator?

Using a SIP calculator takes a smartphone or computer, internet connection and a few simple steps.

  • Choose the website that you find the most reliable and renowned for its services.
  • Select the SIP calculator from the list of products.
  • Enter the monthly SIP amount of your chosen plan, tenure of investment and the interest rate and click on the calculate toggle.
  • You will get the results within a few seconds. Refresh the webpage to enter the same data of some other mutual fund.

In this way, you can identify which plan will yield how much profit. So, you can easily compare the returns and then choose the one that is offering more.

Benefits of Using SIP Calculator

  • It is free of cost and easily accessible.
  • Saves all the effort of manual calculation and tells how much to expect from a plan.
  • Saves a lot of time as the calculations take a few minutes.
  • You can use it anytime and anywhere.

Compare the Returns

After finding all the possible outcomes of your preferred plan, you should choose the amount of investment that is yielding higher returns. Once you start doing the calculations with the SIP calculator, you are likely to find the same outcomes of different amounts of investments. So, you can easily make a comparison between the available options.

Invest in SIPs in 3 Simple Steps

Investing in SIP mutual funds is a hassle-free task that requires very minimal documentation.

  • Step 1: Identify the objective of your investments and then choose whether you want to invest in equity funds or debt funds. If you face any doubts, try consulting with the mutual funds’ advisors to help you out.
  • Step 2: Choose the SIP plan that you want to invest in and then apply for the same. You can easily do it online with the help of a financial company that offers mutual funds investments. You will need to produce all the documents that can serve as a proof of address, income and identity.
  • Step 3: Select the date on which you wish to pay the instalment every month. Provide the details and complete other formalities as per the instructions. You may also choose the auto-date facility wherein the SIP amount will automatically get deducted from your linked bank account.

Identifying the correct amount of SIP investments can help one reduce the risks associated with the money market. The inevitable fluctuations in the market can cause hindrances during the investment process. If you make a rational decision and invest in SIPs considering all the important factors, those hindrances will not hit your pocket. Also, do not forget to choose a reliable service partner for investing. Enjoy the benefits of mutual funds investments through flexible payment options!

Disclaimer: This content is distributed by Scripbox. No TNIE Group journalist is involved in the creation of this content.

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