Systematic Investment Plans (SIP) is a form of investment where people invest a small amount regularly. It is a method of investing in mutual funds. SIP investments are always goal-based. Normally, salaried people invest in this fund to get returns for specific goals like retirement, buying a house, buying a car, marriage, children’s education, etc. SIP is best suited for those who do not want to invest a lump sum in mutual funds. However, the major concern about this investment is choosing an appropriate SIP. Hence, here are a few suggestions to pick the best fund for SIP.
- History of the SIP
To pick the best fund for Systematic Investment Plans, you can go through the history of various funds you are looking to invest in. It is advisable to investors that they should invest in a SIP fund that has more than 3 to 5 years of market presence. You should also check the return from the SIP in the past. The plan which has the most suitable history should be chosen.
- Operator and manager of the SIP fund
Before investing in a SIP fund, it is advisable to prefer a SIP that is operated by your bank. The best SIP fund investment is the one that is safe and reliable and the bank’s fund is the one. You can also cross-check this information about funds from your bank. Secondly, the best fund is one that has an efficient fund manager. An efficient fund manager can bring out the best result of your investment. It is because a fund manager is the person who takes all the important decisions regarding investing stocks and securities related to the fund.
- Consistency of returns
To pick a fund for SIP investment, always look at the returns it offers. The return on SIP should be consistent. Every year, the return percentage on SIP fund investment keeps changing. However, there mustn’t be much difference between the SIP percentage every year. A consistent return is one in which if return percentage in the first year is 10%, in the second year is 11.5%, in the third year is 12.5%, and so on.
- Analyse risk and volatility
SIP investments are mostly made for certain goals. Hence, investors should look for the investment with minimum risk. Secondly, the volatility of the funds should also be analyzed. Volatile SIP funds take your investments very high on certain days but it can also come down with double speed. Hence, volatile funds should be avoided.
- Ranking of the funds
The most important thing for picking the best SIP fund is the rating of the funds. Various companies provide ratings and analytics of funds and investment options. You can check the ratings of your preferred funds from such websites and choose the most suitable fund for your SIP.
Based on the above suggestions, you can choose the best fund for sip. Notably, you can also use the SIP fund calculator to choose a SIP fund for your investment. For investing in SIP, you can also take the advice of your financial adviser.