Your Quick Guide to Choosing Systematic Investment Plans Wisely

by Finway FSC Empowering People Financially

How can I choose systematic investment plans (SIPs) wisely and lower the risks associated with it? These are the questions that trouble the first-time investors as they have a little understanding of how SIPs actually work and what kind of SIPs are smart and what are bad. The first thing first, there is no such thing a smart SIP or a bad one because the agenda behind opting for SIPs is to pick out the simple and most attainable investment company schemes so that the all semi-permanent goals can be achieved using the wealth accumulated. But, one should be very careful while selecting any SIP depending on the short-term or long-term goal. Where many would suggest to first check the rating of the company (just like we do in search of low interest home loans) where one wishes to invest, the financial advisors consider the company rating only a small part of the big picture, which includes quantitative measures such as returns and risk average FTO.

Basically, the ratings are seemingly work on “one-fits-all” approach which are unaffected by the real-life scenarios as associate degree investment. However, ratings are helpful when it comes to sort out the investment-worthy funds from the not-so-good ones. So, what else are the parameters then to keep in mind while choosing SIPs?

This is the thumb rule applied to almost every decision-making process—whether it is about choosing low interest home loans or business unsecured loans or the mutual funds. The past performance of the investment company is the first thing one should pay attention and analysing the fund is the second. But because the dynamic market conditions make it tough for any company to sustain its optimal performance, it is recommended to not to rely solely on this parameter for comparison. Instead, one can check if the funds he shortlisted match the benchmark index to make a wise and well-informed decision. Moreover, the returns as well as associated risks associated with SIP or mutual fund to determine as well as predict the overall performance of SIP. However, one should be very well-aware of the fact that returns are not the whole and sole parameter to evaluate the fund and should, therefore, avoid making investments in a particular fund by just attracting to the returns. Similarly, alluring to the funds influenced by the associate degree approach.