Are‌ ‌SIPs‌ ‌really‌ ‌the‌ ‌best‌ ‌way‌ ‌to‌ ‌invest‌‌‌ ‌in ‌mutual‌ ‌funds?‌

best‌ ‌way‌ ‌to‌ ‌invest‌

SIPs are the most sizzling topics in terms of planning and investments. Investments are a vital part of every human’s life. If a person is unable to invest his money in a productive way, all his earnings may go in vain. In today’s’ world, where money is almost everything, a good investment plan is a must. So, before moving on to whether SIPs are the best‌ ‌way‌ ‌to‌ ‌invest‌, let us first discuss, what SIPs are:

So, to start with, SIPs stands for Systematic Investment Plans. These are very simple and a very flexible way of investment of money. Additionally, in the case of a systematic investment plan, you will spend a fixed amount of money. The bank will charge you a fixed amount on a monthly or quarterly basis, depending on your plan. These fixed amounts are for your mutual fund schemes. Then, you will get a number of units of this particular mutual fund, on the basis of the buying price of that fund on that individual date.

There are a lot of advantages of an SIP and some are here below. By reading these advantages of Systematic Investment Plan, you can decide whether it is the best‌ ‌way‌ ‌to‌ ‌invest‌:

Amount:

The amount of an SIP may start from a very small amount. In fact, the amount can even be as small as Rs.100. This absolutely goes easy on your pocket. This is definitely one of the most suitable things, if someone is planning to invest for the first time.

Investment frequency:

The frequency of investment can be either monthly, quarterly, weekly. This will depend on what you choose for your investment.

Market timing:

One of the most important advantage of SIPs are that they do not need market timing. You will not have to time the market. This is because, in this case you are investing the money in various prices. Thus, it also provides you with the opportunity to start it in all kinds of market conditions. The rupee cost averaging is another major advantage over here. it enables you to lower the cost without the fear of market conditions.

Disciplined investments:

As the name suggests, the SIPs are quite systematic and in nature and are absolutely hassle free. Systematic investment plan is a periodic method of investment. So, it tends to inculcate a disciplined way of investment. Also, it helps to make a portfolio of investment and it is absolutely devoid of hassles.

Rupee cost averaging:

This is probably one if the biggest advantage of Systemtic Investments plans. And, this is rupee cost averaging. SIPs tend to give the investor the benefit of rupee cost averaging. This is because, the entire process of investment takes pace in a periodic manner.

Stop it any time:

You do not have to pay any fine if you want to stop your SIP plan. Simply just opt out of it and you are done.

How to Make Goal-Based Investment?

Goal-Based Investment

Without a doubt, investment is an essential aspect of our life. In general, people opt for various investment schemes. Because of the fact that they want to save the upcoming future. Investment multiples the wealth of an Individual and also shoulders the monetary requirement that necessitates due to life need such as career, health, marriage, and many more. But very often the investors forget the main motto of their investment. Then start to expense out all the investment money. Broadly speaking due to the fact, people fail to manage the long-term monetary goal. The necessity of goal-based financing has been raised. Goal-based financing offers a complete framework that protects the future of the person.

 What is a goal based investment? 

 The investment world is a relatively new but innovative investment method. That helps to grow your health with complete wellbeing in life. This is a broad concept, where the investors invest the money with a target of procurement security to the many aspects of life such as protecting health, career, your children’s career, your children’s marriage, spouse’s health including buying a house, saving the money for the future and many more.

 How the goal-based investment is calculated:

 There are many factors that are considered when the goal-based investment is counted. The first and foremost is, what is the maximum risk factor that related to the Investors’ profile. And the second most important thing is to invest the money in order to procure a sustainable wealth gain in a systemic way instead of chasing the higher monetary return. Besides that, this method of investment counts the time horizon, that backs people to earn a return on their wealth as well as saves their future.

 Why the goal-based investment is important in life

 As we all know that the future is unpredictable and to save our future we usually save our hard owned money. So that we can get help from our investment money in a bad period of life. But there are such big instances that happen in our life. It could take a portion of the investment money from your pocket. Perhaps there are no such deadly instances in your life and hence you able to achieve a full gain of investment.

To make understand the situation, we will give a small example. Imagine a situation, Where one of the mutual funds is got matured in recent days and you got the whole amount intact in your hand. In fact, you got the maximum return benefit out of the investment scheme. Because you did not use a single penny from that mutual fund. But as you don’t have a monetary goal, you spend all the money on a foreign tour, and thus your whole is vested in unnecessary expense. On the other hand in this case, if you were in a complete goal-based investment method, then maybe you are wealthier to secure your future. Hence, we can say that the investment scheme without a goal is just like the boat without a rudder floating in the sea.

 How to Make Goal-Based Investment:

Goal-Based Investment is a complete, easy, and effective process. In the beginning phase, you have to hire a personal portfolio manager who will manage your finance on behalf of you. Even you can manage your goal-based investment by own if you know the complete procedure of investment structure. All the professional goal-based managers actually count your age, your financial capacity, career, responsibility, the requirement of retirement, and many other factors. Also, they count the future market volatility in the upcoming 40 years. After calculations all these factors they provide a strong investment pathway for your future. Even they consider all the upcoming recessions that will come in the life market.

Things that should be counted while measuring goal-based investment are written below:

  • Specific and calculated risk
  •  Measurable income
  •  Action-oriented investment steps
  •  Realistic approach

  • Time-bound small steps

Give on Hand to reputed Portfolio:

 Before giving the privilege to manage your fund, investigate and examine whether the portfolio manager is capable to manage the long-term goal-based investment or not.

Ending our discussion, we must say that, in the above, we have given a short description of the process of achieving the Goal-Based Investment goal.

Planning to sell Mutual funds? Know the right time

When is the right time to sell mutual funds

One of the toughest things to calculate that can be tougher than rocket science is, “When is the right time to sell mutual funds ?”. Investing in mutual funds is one of the simplest ways to accumulate wealth. Investors may think that once they have bought a fund, they can stay put and the wealth will just accumulate on its own. It is one of the biggest mistakes that you can do because not all funds are a lifelong investment. You need to understand the circumstances when you can sell the funds or just leave them however they are.

Let us explain the circumstances when you may think about the liquidation of funds or stay away because of negative consequences. 

Stocks and Mutual funds are different things: 

This is the first thing that you need to understand. Mutual funds and stocks are totally different things. So, it does not mean that you need to sell your funds when there is a dissipation of the stock market. It is solely based on the morale of “buy low and sell high”. This is why investors get eager to sell their stocks when the market is down suddenly. 

Mutual funds, on the other hand, are not singular entities like stocks. There are various types of mutual funds and they are classified according to the degree of diversification. However, you should know this important factor that you shouldn’t rely on market timing to sell funds. It will be a futile strategy as the portfolio of a mutual fund may represent various kinds of markets. 

When is the right time to sell mutual funds? 

Consider some factors that may affect your return when you are chasing in your mutual funds. Read below to know more: 

Change in a mandate: 

You may consider selling your fund if it changes its investment style. Suppose, you have invested in a multi-cap fund which has now a mid-cap fund, then it will be best for you to quit if you don’t want to bear the added risk. Similarly, if you have a debt fund and it has changed its fundamental attributes, then you should consider an exit. 

Fund performance:

 Your funds may consistently underperform in its category. This is the time when you should consider selling the funds. However, you shouldn’t take this decision based on a short term result. There are good funds that have performed for a long time but have a temporary downfall. In those cases, you should wait for a recovery. 

Change in ownership: 

There are different kinds of fund houses each of which has distinct investment culture. If a fund house is acquired by another one, then the investment policy is most like to be changed. Always stay aware of any significant process to know how your fund is being managed. 

Change in fund manager: 

Fund managers have an impact on the fund performance no matter whatever a fund house says about their approach. If there is a change in the fund manager, you really want to keep your eyes open. 

Requirements in liquidity: 

If your purpose of investing in the mutual fund is complete or if you are close then you may consider exiting. You may liquidate your fund or you may consider transferring the total fund to a debt fund from the equity. You may opt for an SWP or an STP plan to exit the fund. 

Holding overlaps: 

For instance, you own two funds with significant overlap in holdings.  You may consider selling one of them because none of them will give you the ultimate level of diversification. You may consider selling funds if you have too many portfolios. Keeping two or three of them to attain diversification is a nice step. However, more than that can increase complexity instead of benefiting you. 

Selling a mutual fund is not something that you should do hastily. Give numerous thoughts to the decisions before getting into the action. What you need to remember is that you initially invested in the mutual funds because you were confident. If you are satisfied with the pros and cons of your fund’s performance and still consider selling it then there shouldn’t be any backlog that you should think about.

So, these are the instances that you may consider selling your mutual funds. If you have decided that it is one of those above reasons that you want to exit a fund then it is good as long as it can justify your reasons. However, selling a fund just because of some short-term gain is not necessary. Funds that are being held for a long time have the potential to strengthen your wealth. Selling off those funds without any proper planning and too early will not only make you miss out on those gains but your goals may suffer as well.