Rules That You Should Remember When Making SIP Investments


Over time, it has been established that Systematic investment Plans are the best form of investment for someone who is looking to get disciplined in their investment journey while earning returns that are a lot higher than what other investment modes have to offer.

But just like any other activity that demands discipline, SIP investments also call for some rules that have to be followed to the T in order to gain the maximum benefit.

In this article, we will be looking into the different rules that should be followed by both – new and experienced investors. The rules, although seemingly simple, take high dedication to stick through.

Without further delay, let us tell you what those rules are that will change the outcome of your SIP investment, for good. 

Rule Number. 1: Get Insights Into How SIPs Function

Systematic Investment Plans does not offer any kind of fixed interest or any amount of constant returns. In addition to this, there are times, which might extend to a year or two at times, when the SIPs are performing in red and showing signs of great loss and sometimes, it can be the exact opposite. So, you should start by getting a hang of how SIPs work and the fact that it doesn’t remain the same at all times.

Rule Number 2: Play For the Long Run

Starting a Systematic Investment Plan for a short period of investment time might lead to severe losses. For starters, it can be a good move to start with short term Systematic Investment Plans which are speculative. When investing in SIPs the right time frame is a minimum of five years, while it benefits you immensely when you get into it for the long run of 10 years and it gets you the biggest benefit of compounding, meaning heavy growth. The rule is simple. Start SIP with an amount you are very comfortable with and then continue making investments.

Rule Number 3: Don’t be too passionate

Unlike any other form of investment, the strength of SIPs lies in being impassionate. It can sound very surprising for you but this is also the truth. Starting SIPs and then forgetting about it altogether tends to create greater wealth than you would by checking into it on a daily basis.

So, instead of looking into your SIP on a continuous basis, you should shut the market noises out and completely ignore the fund pundits for even if the market is facing a downfall, you will end up purchasing more units for the SIP amount and thus you will make greater returns in the long term.

Rule Number 4: Do not replace funds frequently

If you have selected and added good funds in your portfolio, there is a very minimal chance that you will achieve any real value by replacing your funds which according to you are non-performers for the ones that are performers.

What we advise is that you keep your SIP functional in the long term unless anything changes all of a sudden. Constant replacements are only going to affect the SIPs adversely.

Rule Number 5: Link Your SIPs to Goals

It is important to link SIPs to quantified, tangible, and necessary life goals. Even before you start investing in SIPs, you should think of a goal for which you wish to save.

By syncing the SIP to SMART goals, you don’t just become a lot more disciplined but also become more eager to keep making investments.

When you attach your SIP with a goal, the probability of achieving it automatically gets higher. Thus, it is very important for you to have some short, mid, and long-term financial objectives before you start making SIP investments.

So, here were the five rules that we swear upon to have helped our customers. Do you have any other rule that has worked in your favor? Let us know in the comments below. Or if you are too pumped up to start making SIP investment, get in touch with our team of SIP experts.

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