SIP lessons for first time investors

The first time investors are already in a dilemma regarding the avenues in which they can put their money. Even if they decide to invest in mutual funds then too they need some guidance for the investing their money in a better and secure manner. As the first time investors are totally unaware of the investment process they should take up SIP plans for initiating their investment. The clients should follow the below mentioned points so that they can make the best possible use of their money.

1. Ask a few basic questions to yourself

There are a few basic questions one must ask themselves before commencing their sip investments. They need to make the best possible use of their money as it is their first experience of investing and they do not want it to be a bitter one. So, before even starting the clients must know the duration of investment, the amount they are willing to invest monthly in a SIP fund. These will help the clients to know their requirements and devise a strategy accordingly for it. Thus, in order to succeed in the task of investing they must decipher their needs and capacity to invest.

2.Take up short-term investment

The newbie investors are the ones who do not have the practical knowledge of the mutual fund industry. So, for them to quickly jump into the equity schemes might be difficult as they would get shocked by the sudden fluctuations. As SIP plans are applicable for each and every scheme which means that the clients who are new to the industry must start with the low risk schemes like liquid funds and ultra short-term debt funds. These will allow them to save money as well as make the best possible use of their money within a limited time spell and also understand behind the scene process of a company.

1. 3. Monitoring is necessary but not everyday

   It is true that the clients should monitor their investments themselves and not solely depend on the investment agents and consultants. It can be a very crucial task for them as the clients will not be able to know the progress of their money and so they must monitor their SIP investments timely. But it does not mean that they become obsessed with it. Opening up your portfolio every now and then will not increase your profits by any chance but will fill your mind with unnecessary doubts. So, monitor your investment plans at regular time intervals but not too often. You will have to learn to be patient with your investments and give it the required time to multiply.

2. 4. Graduate to long-term schemes eventually

   It is true that mutual funds are best suited for the long-term investments as only then it is capable of producing the required rate of return to the clients. But, for the new comers it becomes quite difficult as they do not have much knowledge about the SIP investment plans so they must gradually move on to the riskier schemes directly. It means that the clients should start from a very secured level and then gradually move up to the higher and riskier schemes. The clients can first take up liquid funds then small cap and then finally the large cap and diversified equity schemes. It will help them to manage their risk profile and also make optimum use of their money.

3. 5. Take up the online way

   Online SIP investments are taking up pace among the investors and are enabling the clients to make the best possible use of their money. There are many upcoming online SIP investment portals in the industry which allow the clients to easily invest their money while sitting in their home and make monitor their SIP plans as well. There are many such online portals which do not charge any extra amount for the services they provide. Thus, it becomes cost and time effective for the clients to do investment.

To conclude, to buy SIP online is much more easier as compared to the offline method as it becomes easy for them to invest and manage their portfolios and also the novel investors can understand the concept of online mutual funds while they do it themselves and the chances of treachery reduces manifolds.

Dishika is well-versed with the ups and downs of the financial market and has published articles on mutual fund and SIP. She is associated with MySIPonline.com, which is an AMFI registered mutual fund company.