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Doing SIPs Correctly, Have You Been? These 7 Options You Should Need to Know



Doing SIPs Correctly, Have You Been These 7 Options You Should Need to Know

India has achieved success with SIPs. According to AMFI, contributions to the Monthly Systematic Investment Plan (MSIP) reached ₹19,186 crore in March of this year, exceeding ₹18,838 crore in January. While it is well known that using systematic investment plans (SIPs) to make long-term mutual fund investments can help investors weather market fluctuations, investors may not be fully aware of all the benefits of SIPs.

Are you following SIPs correctly? The following types are probably unfamiliar to you.

  • Tenure-based SIPs: Designed to last between three and ten years, these SIPs give investors the freedom to match their investments to their risk tolerance and financial goals. In addition to using rupee cost averaging and compounding benefits, a fixed tenure promotes discipline.
  • Multi-SIPs: These allocate money simultaneously to several mutual fund schemes. This method improves the overall performance of your portfolio by reducing risk and utilizing the distinctive qualities of various funds.
  • Combo SIPs: These make investments in both debt and equity. This diversified strategy is ideal for investors who are risk averse because it not only reduces risk but also guarantees steady returns.
  • Flexi SIPs: Provides the freedom to change investment amounts in response to market conditions; they support a range of investments. For example, investors can reduce their exposure during bullish phases and increase their investments during market downturns.
  • Step-up SIPs: These plans allow investors to increase their contributions on a regular basis and are made to accommodate gradually larger investment amounts.
  • Trigger SIPs: These invest in mutual fund schemes in response to predefined market triggers, such as a predetermined percentage decline in the market.
  • Insurance SIPs: SIPs with insurance cover provide a hybrid financial product by combining the advantages of systematic mutual fund investments with life insurance coverage.

SIPs are powerful investment tools that enable investors to approach their financial goals methodically. Through an understanding of the various SIP categories and their associated advantages, investors can create a strong plan that meets their needs. Investors must not only choose appropriate SIPs but also stick to their investment goals over the long term with a disciplined approach and unwavering commitment.

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