What Are The Ways To Maximise SIP Returns?

Inflation exists. The rate at which the products and services costs are increasing yearly is alarming. You cannot depend on your monthly income solely. You must consider investing your income into instruments such as mutual funds that offer an additional income source and build a decent retirement corpus.

Mutual fund investments are made in two ways – lump sum investments and a Systematic Investment Plan. Let us understand what SIPs are and how you can maximise your returns through them.

What are mutual fund SIP investments?

A SIP is through which you can invest in your preferred mutual fund schemes in instalments. You can invest small amounts of money (minimum Rs. 500 every instalment) in different schemes every week, fortnight, month, etc. The units allotted depends on the price of the stock, which varies monthly.

Make the most of the SIP investment returns with the following tips:

Longer tenure of investment

For building a corpus, you should make your money work for you. This gets done by staying invested for longer tenures. When you remain invested for a lengthy period, you gain more profits. The profits earned gets reinvested by the power of compounding. This enables you to create a substantial corpus.

Increase SIP amount with income raise

Another way to maximise your SIP mutual fund is by increasing the investment amount yearly. An increased income annually gets used tactfully for generating higher savings. You can increase the instalment amount at regular intervals, typically once a year. You could also invest in new plans when your income rises to maximise investments.

Avoid panicking amidst volatility

Equity markets are unpredictable. This volatility leads to stressful emotions – fear, panic, and greed, for instance. But if you seek to profit from them, keep all these emotions under check. Avoid the urge to enter or exit a scheme if there is volatility. In such scenarios, revisit your investment plans and goals and maintain discipline instead of letting your emotions moving ahead.

Maintain diversification

Diversification is an essential virtue for any share market investment, including mutual funds. You can invest in a wide range of SIP plans – be it debt, equity, ELSS, income funds, gilt funds, etc. Diversifications build your investment portfolio while also mitigating the risks associated with investment under one scheme.

Disciplined SIP investments through mutual fund apps or the internet create a decent retirement corpus. It allows you to create an additional source of income as well.

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