Want to start SIP in mutual fund? Know how safe it is and how you may start one

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Published: September 10, 2019 1:39:21 PM

According to a CRISIL-AMFI research, SIP investors, who continued to invest for five years, have never ended up losing their money in the history of Indian stock markets.

Mutual Fund, systematic investment plan, SIP, how to invest in Mutual Funds, MF, SIP meaning, Mutual Fund Sahi Hai, how safe is MF investment, what are the benefits of SIP, CRISIL-AMFI research, how to reduce market risksTo cushion the effects of market volatility, it is advised to invest periodically through Systematic Investment Plan (SIP) than making lump sum investments in one go.

Mutual fund investments are subject to market risks. But the effects of market fluctuations on value of funds gradually fade away with time, eventually giving superior return in the long run than other investments to those who invest in a planned way and withstand the short-term market turmoil. To cushion the effects of market volatility, it is advised to invest periodically through Systematic Investment Plan (SIP) than making lump sum investments in one go.

It is because, when you invest same amount in regular interval, some installments would be invested in higher market and some in lower market, which would average the risk.

On the other hand, an investor would gain only when the value of fund goes above the level at which the lump sum investment was made.

However, an investor doing SIP would get more units when the market is down, which would enhance the profitability when the market recovers.

According to a CRISIL-AMFI research, SIP investors, who continued to invest for five years, have never ended up losing their money in the history of Indian stock markets.

So, always invest the money which you may spare for at least five years, and longer you stay invested, higher will be the gains.

Hence, long-term investments in equity MF through SIP are quite safe, provided you pick up the right fund as per your investment needs, identified through proper financial planning to fulfill your long-term financial goals.

You may start your SIP both offline and online. For offline investment, you to fill the required forms and submit it to the AMC or its registrar and transfer agent or to a MF broker.

You may do online investment either by opening a demat account with a broker or by visiting the AMC sites. Currently, digital wallets as well as other registered corporate investment advisors also providing online facilities to make investments in mutual funds.

However, it is not only ease of investment, but controlling emotions during sustained market turmoil, which is more important to stay invested and make gains in long run. So, for novice investors, it is advised to take guidance of experienced financial advisors to enter the equity segment to minimise the chance of ending up losing money.

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