Skip to main content

Take SIP route of Investment during this volatile stock market

 

THE usefulness of a systematic investment plan (SIP) is clearly visible at regular time intervals. Often, it is during tough times, when one is able to appreciate the benefits that an SIP provides and how this can be effectively utilised by the investor to build a strong financial position.

Here is a look at some of the conditions when this route would be useful for making investments.

Large amount to invest: One situation that the individual has to encounter is where they have a large amount to invest but they actually are not very confident about investing the amount. This happens due to the fact the investor wants to ensure that there is a low initial risk present on their investment. There is a large risk in making a one-time investment, as a sudden change in the situation from the time the amount is invested, could result in a large loss that is unaffordable.

So, if a person has Rs 25 lakh to invest and they want to invest into equities, then they would not like to come to a situation, where, in a week, after they invested the amount, there is a loss of 10 per cent and they find that they have lost a sum of Rs 2.5 lakh. Instead, they would want to ensure that the amount is invested in such a manner that this kind of initial risk is minimised, which is where the usefulness of the SIP comes in.

Regular investment: The other thing that a lot of people want to ensure is that there is a regular investment over a period of time so that they are able to ensure that the financial planning process is successfully carried on.

When the regular investment is required, then they would want that there is some way by which they need not make calculations every month and direct the investment in a specific manner.

This will mean following the SIP process, where, for example, they are able to, say, that out of the savings of Rs 15,000 per month, Rs 8,000 a month will be invested into two equity-oriented funds. This will ensure that there is ease of completion of process, without having to undertake any tension once they have set up the entire investment structure.

Uncertainty about equity markets: The manner in which the individual selects the investments for the SIP is important, but there is also a situation where the individual faces an uncertain equity market. There will be occasions when the individual will not be clear about the manner in which the equity markets will move, and hence, they will be confused whether they should complete their investments immediately or wait for a better opportunity to emerge. In such a situation, when the manner of the movement of the markets is not clear, the individual would be better off in selecting an SIP route for the investment.

This could mean that there are a lot of times when the SIP would be the best route that would be present for the investment. The individual can save a lot of trouble by just going in for the SIP and leaving out the investment worries to the fund manager, rather than trying to understand very short-term movements in the equity markets and then finding out that they have been wrong in these predictions. It is nearly impossible to time the markets, and hence, investors would realise that they are better off using the simple SIP route and save a lot of worries.
 
Download Section 80CCF Tax Saving IDFC Infrastructure Bonds Application Form
 

Download Section 80CCF Tax Saving L&T Infrastructure Bonds Application Form
 
 
 
 

Popular posts from this blog

L&T Growth

Invest in Mutual Funds Online Download Mutual Fund Application Forms   L&T Growth Fund (LTGF) is open-ended diversified equity fund that invests predominantly in large caps. LTGF follows the growth style of investing and has been in existence for over 10 years now.   Type of scheme Open-ended Category Diversified equity Sub-category Large Cap Style Growth Launch date September 17, 2001 Risk-Return proposition High risk-Average return   Investment Objective and Proposition The fund's primary investment objective is "generate long term capital appreciation income through investments in equity and equity related instruments; the secondary objective is to generate some current income and distribute dividend. However, there is no assurance that the investment objective of the scheme will be achieved." Following large cap ...
Read more

Franklin India High Growth Companies Fund

Franklin India High Growth Companies Fund Online One of the key developments that the Street is keenly waiting for is a cut in interest rates by Reserve Bank of India . With demand rising gradually, a rate cut is expected to boost earnings growth for companies. In such a situation, schemes which invest in high growth companies are best suited, especially when seen from a long-term perspective. One such scheme is Franklin India High Growth Companies Fund. Fund managers Anand Radhakrishnan, Roshi Jain and Srikesh Nair strictly follow valuation parameters when it comes to choosing stocks.Valuation parameters, such as enterprise value, price-to-earnings growth ratio, forward price-to-sales ratio and discounted earnings per share, play a critical role in selecting companies for investments. Taking into account these parameters, the fund managers invest in companies which are poised for high growth in their respective sectors. This approach has been in favour of the scheme and it has perform...
Read more

Equity ETFs vs Diversified Equity Mutual Fund

Invest in Mutual Funds Online Download Mutual Fund Application Forms   The importance of being active couldn't have been explained better. To put it simply, one needs to be active in his or her daily life, if one desires to succeed. An active mind always helps in making sound decisions which otherwise (if you are not active) could lead to chaotic situations (one does not make the right decision). On the other hand if you remain passive (i.e. not active) in whatever you do, you will surely see yourself at the losing end.   Now, that you are aware of how important it is to be active, make sure that your investments are active in generating long term growth in order to make you wealthy as well as healthy.   While investing in mutual funds too, you investors need to be careful while selecting the right mutual funds according to your ability to bear risks. You need to keep in mind that while there are mutual fund schemes which are actively managed in order ...
Read more

Mutual Fund Exit Load Changes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...
Read more

Birla Sun Life Dividend Yield Plus

Invest in Mutual Funds Online Download Mutual Fund Application Forms   To invest in fundamentally sound companies with a dividend yield of at least twice the Sensex yield. The fund has flexibility to invest up to 35 per cent in companies facing special situations like de-merger, buy-backs, open offers. However, the same is used very selectively with focus on minimizing downside risk. Dividend paying companies usually have healthy free cash flows, steady earnings growth and a strong balance sheet. This results in steady stock returns over the long term while providing relatively better downside protection in case of market correction. The strategy of investing in a dividend yield stock at times becomes a contrarian one as undervalued or out-of-favour stocks also offer higher dividend yield. Tactically, we are focused on segments of the market which are dependent on mainly domestic economy / developments. The fund has held significant positions in banking, FMCG, Fertilizers, oi...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now