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Find The Best Fund To Invest In Sip Now
Total Articles: 4
Before you invest in mutual funds through SIP you should consider a few points. You should first identify your goals. You should invest to reach your goals. Investing with a goal in mind keeps you focusses to your investments. You should decide your risk appetite. You should not invest without knowing your risk tolerance. You should decide for how long you want to invest.
You have to find the funds that meet your requirements. The objective of the funds you invest in should match your investment objectives. You should do proper research before investing. The best fund to invest in SIP are those that help you reach your goals, fit your risk appetite and suit your requirements.
You should ideally invest in 3 - 5 funds. You should also diversify your investments to reduce risk. You can diversify your investments across equity, debt and gold. You have to decide how much to invest across each asset class. The risk in one asset can make up for the loss in another.
Best funds to invest in SIP based on goal based investing
Depending on your goal you select the mutual fund to invest in. If you are investing for 0 - 3 years than it is called short term investment. The best funds to invest for short term are liquid and debt funds. If you are investing for 3 - 5 years then it is called mid term investments. The best funds to invest for mid term are hybrid funds. If you are investing for 5+ years then it is called long term investments. The funds best suited for long term investments are equity funds.
You should not forget the effect of inflation. You should check the real returns of the funds before investing.
Why invest through SIP?
There are various reasons as to why you should invest through SIP in mutual funds. They are as follows:
It is convenient as it is an automated process.
It allows you to invest in a disciplined way every month.
It supports the power of compounding. In compounding the initial amount earns interest and the previously earned interest also earns interest. The longer you stay invested more the benefits of compounding.
As you invest a fixed sum you can buy more units when the market is low and vice versa. This brings down the average cost of acquisition of units.
The author is a blogger and likes to write on the various topics on mutual funds. Here the author has briefly described how to find the best fund to invest in SIP.
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