A Systematic Investment Plan (SIP) is a mode of investment offered by top fund houses to allow you to invest in small amounts regularly instead of a lump sum. This helps build a disciplined approach towards periodic savings. When you consider predicting returns on your investments, a mutual fund SIP calculator can help. It can give you a rough estimate of the expected returns since they're subject to market conditions. Taking a look at the estimated returns from time to time can signal you when you should try to increase them. But how can boost your returns? Here are some useful tips to check out.
Start Early If you start investing early, you can get maximum time to save and grow your returns. Over time, they can increase manifold with the power of compounding offered by SIP. Boost your Investment Regularly Returns are directly proportional to investments. In SIP, this is primarily ensured by the effect of compounding. After checking the expected returns on the SIP calculator at a point in time, you can opt for step-up SIP to increase your investment if you aim for higher returns. This feature lets you top up your investment by a predetermined certain amount at regular intervals in tune with your income and financial goals. Set a Long-Term Goal SIP works best for long-term financial goals like your child's higher studies or marriage, buying a house, and retirement. In that case, the returns will keep accumulating over a long period until maturity to offer you sufficient funds to meet your objective. You can use an SIP calculator to ensure the same. Avoid Withdrawing Early You can have a financial emergency anytime. But it's usually not a good idea to withdraw your investment when such an emergency occurs. Market conditions are hard to predict. The value of your portfolio would go down if you back off when the market is low. Don't Stop Investing When the Market is Bearish If you stop your SIP in a bearish market, you can't benefit from rupee cost averaging which is an essential part of SIP. It allows you to earn higher units in low market conditions, thereby bringing down investment costs and boosting returns. You can also step up your SIP in a weak market to park an investible surplus to capitalise on it. This may even help realise a goal earlier than the previously considered timeline. Keep using the mutual fund calculator to be on track. Review the Performance of Funds Avoid deciding on your investment based on the recent fund performance. Different market factors like the government's policies to support the economy can favour a bull run. Generally, it's best to compare the performance of a fund with its peer funds over the last 5-10 years. Then you can see the performance of the funds over the whole economic cycle. Consult the fund manager to decide on the right kinds of funds to invest in to expect good returns while also taking into account your risk appetite.
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