Mutual Funds: Although many types of options are available now in terms of investment, but if you want to make money fast in the coming years, then definitely include Mutual Funds-SIP in your portfolio. But before investing, be sure to know those things due to which people often have to face losses.
Investment is a medium which helps in securing your future. This is why most financial experts recommend that you should start the habit of investing with your first salary and as your income increases, you should add various types of investments to your portfolio. If you have not started investing yet, then start investing from this new year.
Although many types of options are available now in terms of investment, but if you want to make money fast in the coming years, then definitely include Mutual Funds-SIP in your portfolio. Since it is market linked, it cannot be said about guaranteed returns, but most experts say that it gives an average return of 12 percent. Through long term SIP, you can prepare a huge fund for your future. Know here its 4 big benefits-
1- Flexibility
The first advantage of SIP is that there is flexibility in investing through SIP regarding investment period and amount. That is, you can choose the investment period option of monthly, quarterly or half yearly as per your convenience. Apart from this, whenever you need, you can stop it and withdraw money from your SIP, and as your income increases, you can increase the investment in it. Experts believe that if a little money is added every year at the rate of 5 or 10 percent in SIP, then it gives huge benefits in the long run.
2- Interest on interest also
There is a huge benefit of compounding in SIP, that is, you not only get interest on your investment, you also get interest on that interest. Therefore, SIP should be done for a long time, the longer it is, the greater will be the benefit of compounding.
3- Rupee Cost Averaging
In SIP you get the benefit of rupee cost averaging. That is, if the market is in decline and you have invested money, then you will be allotted more units and if the market is rising, the number of units allotted will be less. In such a situation, your expenses remain average even in case of market fluctuations. That means you do not incur losses even if the market falls. In such a situation, when the market rises, you get a chance to get better returns on your average investment.
4- Habit of disciplined investment
Through SIP, you learn to save for a fixed period of time, that is, whatever money you have to invest monthly, quarterly or half yearly, you spend the rest only after saving that amount. This way you get into the habit of disciplined investing.
5 mistakes which need to be avoided, otherwise losses may occur
If you have decided to start SIP after knowing the benefits of SIP, then also understand about those mistakes which people commit unknowingly and due to which they have to suffer losses later-
- Whenever you start SIP, do proper research first. Investment started without research can lead to loss. If you do not have an idea, you can take help from an expert in financial matters.
- If you have started SIP then do not make the mistake of stopping it midway nor stop it midway. Due to this, you will not get the profit that you were expecting.
- Do not invest huge amount in order to make more money. Many times people are not able to continue big investments due to various reasons and they have to suffer losses later.
- Do not make sudden changes in SIP due to temporary fluctuations in the market. Stick to your long term investment strategy.
- Do not invest all the money in one place only. Diversify your portfolio. For this, include largecap, midcap and smallcap funds in the portfolio.
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