SIP is offered by mutual funds to invest in a structured time-bound manner. It is an affordable way to start since you can begin with as little as ₹500. This helps young adults like the Gen Z and millennials and first-time investors to safely take the plunge. As of May 2022, the Indian mutual funds have about 5.48 crore or 54.8 million SIP accounts through which investors can invest in the schemes periodically at fixed intervals.

This is because one can assure higher returns through different phenomena like the power of compounding and rupee cost averaging by investing through flexible tenures like daily, monthly, quarterly and semi-annually. You can provide standing instructions to the bank to debit the fixed amount without bearing the hassle of writing cheques or manually monitoring the process. A systematic investment plan can offer better results if certain rules are applied. It will help accelerate returns and lessen the impact of market fluctuations. Here’s a look.

Pick Direct Mutual Funds

They can straightaway boost your returns by 0.8% -1%. You can purchase these directly from an asset management company. They can assure a low expense ratio and higher annualised returns when compared to regular mutual funds. In short, you can build a bigger corpus with direct mutual funds which is ideal for long-term financial goals like buying a car, house makeover or educational purposes. It is a good idea to use an SIP return calculator to figure out the accurate amount for investment to tick off the desired goal.

Right Choice of Funds  

Most people get this wrong and end up with disappointing results. So, decide the goals and the investment horizon first before starting an SIP. Check your risk appetite beforehand. See different subjective parameters like performance consistency, the reputation of a fund manager and expense ratio. Try to compare the fund across multiple timelines using the rolling percentile return. Lastly, do segregate into proper ‘baskets’ before comparing since you do not want to compare a small cap mutual fund with a large-cap mutual fund.

Optimise the Portfolio

Make sure to actively manage your portfolio. Check performance history and determine if the same funds will be able to provide the expected returns in years to come. Dig the past records and analyse the return cycle. All of these will help you stay invested in the best funds forever while magnifying the chances of gaining money in the long run. Make the best use of tools like mutual fund SIP calculators to be able to invest the right amount for significant wealth creation for future goals and milestones.

Apply Intelligence

This means looking at historical patterns and gauging market valuations by checking metrics like the Price-to-Earnings ratio (P/E). Now apply what you have learnt to your current investing methodology. This can be a game changer and maximise the return potential to a great extent. Try to avoid premature withdrawal to be able to keep generating better income.

SIPs are ideal when it comes to long-term financial objectives. Use the lump sum SIP calculator to be able to get an idea of the returns with a particular amount. This makes it easy to adjust the amount accordingly. Keep reviewing the status of your mutual funds at regular intervals to minimise losses.