The best mutual funds for a systematic investment plan (SIP)

Investing in the initial years of your life is very important. This helps grow your wealth in the long run and provides a secure future for you and your loved ones. In addition, money gives an individual a sense of safety and even helps during emergencies.

When you invest in the best mutual funds, keep in mind that the top advantage of it is diversification. By investing, you are able to spread your money across a range of assets, which helps reduce the overall portfolio risk.

What are mutual funds?

In this investment scheme, professional fund managers pool money from individual investors in order to purchase a diversified portfolio of bonds, stocks or other securities. This is what exactly mutual funds are.

In simple terms, when you invest in a mutual fund, you buy shares in the fund. Further, the investment value is totally based on the fund’s Net Asset Value (NAV), which is the total value of the securities held by the fund, minus any expenses, divided by the number of shares outstanding.

What is a SIP?

A Systematic Investment Plan (SIP) is a type of investment plan that is offered by mutual funds. Here, investors can invest a fixed amount at regular intervals, usually monthly or quarterly. Further, it allows the investors to make small investments over time, ultimately making it easier for them to build wealth gradually. So, when the investor invests in a SIP, the mutual fund buys units of the fund for the investor at the fund’s current NAV.

This investment scheme is popular among those who want to invest in mutual funds but don’t have the capacity to invest in a lump sum amount.

How to choose the best mutual funds for a SIP?

●    Define Goal

Before investing your hard-earned money, you need to determine what your goal is as well as your risk tolerance. Usually, certain goals include long-term wealth creation, retirement or children’s education etc.

●    Diversification

This is the key to managing risk in your portfolio. So, therefore, invest in multiple mutual funds with different investment styles and asset classes to diversify the investments.

●    Performance Consistency

Before putting your bucks in the best mutual funds for SIP, look for the funds that have consistently performed well and even crossed their benchmarks over the long term. This step will help you identify funds that have a history of remarkable performance.

How to invest in mutual funds?

Nowadays, investing is as easy as ordering groceries from your smartphone. You don’t have to go anywhere and just download the right application on your smartphone. Around six months back, I planned to invest in the same, and one of my associates told me about the Bajaj Finserv application.

Believe me, this app is super easy to use, and apart from mutual funds, it has a lot of investment options to choose from. With just a few taps, you are more than good to go. Just sign up by entering your mobile number and start exploring yourself!

(Disclaimer: This content is not promotional.)

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