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Just like a goal without a plan is a wish, investing without aligning it with a specific financial purpose is like taking a potluck.
Suppose you choose to invest via a systematic investment plan (SIP). Are you aware of which fund to liquidate for purchasing the car you intend to buy after two years? Or do you know the best investment to maintain until you reach retirement age after 30 years? Hence, instead of investing haphazardly, matching the SIPs to the desired financial goals is crucial.
At this time, Multiple SIPs can come to your rescue. Multiple SIPs are similar to SIPs, wherein each SIP caters to a particular type of investor or for specific investment goals and timelines.
Systematic Investment Plan: Meaning
One of the golden rules of investing and the cornerstone of mutual funds is “never put all your eggs in one basket.” Mutual fund investments are now frequently accessed through SIP investments for ease of investing, affordability, and several other advantages.
In a mutual fund scheme, a Systematic Investment Plan (SIP) is a method of payment where investors make periodic payments through scheduled installments (weekly, monthly, or quarterly).
Here are a few benefits that SIPs can provide:
- SIPs provide immense flexibility as you can continue the SIP for the fund while redeeming some or all of the units. Alternatively, you can change the installment amount and take money out of the fund as per your requirement.
- You can opt for smaller investments depending on your financial ability.
- It promotes the habit of consistent investing.
- Because the investment happens at various price points on a predetermined date, you don’t have to worry about stock market fluctuations.
- One can also avail of the benefit of compounding investments with SIP.
Investing in Multiple SIPs
The goal of every mutual fund is to cater to the needs of a particular type of investor or to help achieve specific investment goals and timelines. One has to strike a balance between portfolio and goals.
The best way to do this would be to start with categorizing your goals and related monetary requirements into short-term, medium-term, and long-term goals. Divide the short-term and medium-term objectives into negotiable and non-negotiable objectives.
The funds should be placed in fixed income investments to achieve a non-negotiable goal in the short to medium term. You don’t need a diverse portfolio for such objectives. Moreover, the cash should be accessible as you should not rely on the market to liquidate funds that you need in the short term.
Additionally, you should invest the majority of the money you won’t likely need for the next five years or longer in equity. Then you can group these objectives according to how much cash and time you will probably need for each one and plan investments as necessary.
Concept of Multi-SIPs
Does creating multiple SIP investment plans require more work in keeping track of them and ensuring they are all paid for on time each month? You can avoid these hassles by setting up a “Multi SIP” with a reliable fund house. One SIP investment can be made across multiple funds from a fund house using a Multi SIP.
A Multi SIP, for instance, may divide your monthly investment of Rs 5,000 into five different schemes by purchasing units at Rs 1,000 each. With Multi SIP, you can broaden the range of investments in your portfolio and also reduce the paperwork associated with managing multiple SIPs.
Final Thoughts
Flexibility, convenience, pocket-friendly, and liquidity are just some of the benefits systematic investment plans provide you. To help you choose the best SIP plan to invest in, Kuvera is just a click and a tap away. At Kuvera, we align your financial goals with the best SIP investment plans so that you can fulfill all your dreams seamlessly. So why delay your wealth accumulation? Try Kuvera now!
FAQs
What should I check before investing in SIP?
Consider the following factors to identify the best SIP to invest in:
- Know your risk appetite
- Identify your goal and duration to achieve it
- Analyse the performance of the scheme
- Check the credentials of the fund house
- Read all the Terms & Conditions attached to the scheme
Is it a good strategy to have multiple SIPs?
Yes, one should have multiple SIPs, each associated with a different purpose or goal. Also, remember to invest in various categories to facilitate a diverse portfolio.
For how long should one invest in SIP?
One should only interrupt investments in SIP under the following circ*mstances:
- You’ve reached the anticipated corpus for the planned financial objectives
- The fundamental characteristics of the strategy have changed
- Your risk profile has changed
- You notice an underperformance in the scheme
- You choose to opt for portfolio rebalancing
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As an investment expert with a profound understanding of systematic investment plans (SIPs) and the intricacies of multiple SIPs, I can attest to the importance of strategic investment planning in achieving financial goals. My expertise is rooted in extensive research, practical experience, and a deep understanding of the financial markets.
Systematic Investment Plan: Meaning
The article correctly highlights the golden rule of investing - "never put all your eggs in one basket." This principle is particularly relevant in mutual fund investments, where SIPs play a crucial role. A Systematic Investment Plan involves making periodic payments through scheduled installments, providing investors with flexibility, affordability, and the advantage of rupee cost averaging.
Investing in Multiple SIPs
The concept of investing in multiple SIPs is a sophisticated strategy to align investments with specific financial goals. The article correctly emphasizes the importance of categorizing goals into short-term, medium-term, and long-term objectives. This categorization allows investors to strike a balance between portfolio diversity and goal achievement, optimizing the allocation of funds to fixed income and equity investments based on time horizons.
Concept of Multi-SIPs
The concept of Multi-SIPs is introduced as a solution to potential complexities associated with managing multiple SIPs. It rightly addresses concerns about tracking and payment management by allowing investors to set up a single SIP across multiple funds. This approach enhances portfolio diversification and minimizes paperwork, providing a more streamlined investment experience.
Final Thoughts
The article appropriately concludes by highlighting the flexibility, convenience, and pocket-friendly nature of systematic investment plans. It introduces Kuvera as a platform that aligns financial goals with the best SIP investment plans, emphasizing the importance of wealth accumulation without delay.
FAQs
What should I check before investing in SIP?
The provided checklist is comprehensive, covering crucial factors such as risk appetite, goal identification, scheme performance analysis, fund house credentials, and thorough examination of terms and conditions.
Is it a good strategy to have multiple SIPs?
The article strongly advocates for having multiple SIPs, each associated with a different purpose or goal, promoting a diverse portfolio to enhance overall investment strategy.
For how long should one invest in SIP?
The outlined circ*mstances for interrupting SIP investments are well-reasoned, focusing on achieving financial objectives, adapting to changes in risk profile, addressing underperformance, and considering portfolio rebalancing.
In conclusion, the article provides valuable insights into the world of SIPs and multiple SIPs, offering practical guidance for investors seeking a structured and goal-oriented approach to wealth accumulation.
