10 Tips for Maximising Returns with SIP Mutual Funds (2024)

A Systematic Investment Plan (SIP) offers a clever approach to mutual fund investments. With SIPs, investors can regularly commit a fixed sum of money, be it on a monthly or quarterly basis. This method of investing in mutual funds is highly effective because it aids in spreading out the cost of investments over time and mitigates the impact of market fluctuations.

Here are ten tips for maximising returns with SIP mutual funds:

1. Start Early: Starting your SIP (Systematic Investment Plan) early is crucial to harness the power of compounding. Compounding is the phenomenon where your earnings may generate additional earnings as time progresses, creating a growing financial snowball. The longer your money is invested, the more time it has to grow exponentially. By starting early, even with small contributions, you can may accumulate substantial wealth in the long run. This is why financial experts emphasize the importance of beginning your SIP journey as soon as possible, ideally in your 20s or early 30s.


2. Invest Regularly: Discipline is a key factor in achieving your financial goals through SIP. Make a commitment to invest a fixed amount regularly, whether it is monthly or quarterly. Sticking to your SIP routine ensures that you benefit from rupee cost averaging, which means you buy more units when prices are low and fewer units when prices are high. This discipline also prevents you from making impulsive decisions based on short-term market fluctuations.


3. Choose the Right Fund: Choosing the right mutual fund is crucial to maximising returns. It is important to select a mutual fund that aligns with your investment goals, risk appetite, and investment horizon. Interestingly, Bajaj Finserv Platform offers a selection of over 1,000 mutual fund schemes, providing investors with a wide array of options to find the perfect mutual fund scheme that aligns with their specific requirements.


4. Diversify Your Portfolio: Diversification plays a crucial role in risk reduction, optimising returns, and maintaining stability within your investment portfolio. It is important to invest in a mix of equity, debt, and possibly others like gold or real estate mutual funds to diversify your portfolio.By holding different types of assets, you can potentially offset losses in one with gains in another. It is a way to balance risk and reward in your investment journey, making your portfolio less vulnerable to market fluctuations.


5. Increase SIP Amounts Over Time: As your income grows, consider increasing the amount you invest in your SIPs. This is an effective way to accelerate wealth creation. By gradually raising your SIP contributions, you can take advantage of rising income and avoid the risk of falling behind in your financial goals.


6. Monitor Your Portfolio: Keeping a close eye on your SIP portfolio is essential. Regularly monitor the performance of your investments and make adjustments to your portfolio if necessary. Staying informed about your holdings helps you make informed decisions and ensure your investments align with your financial goals.


7. Avoid Timing the Market: Timing the market is a risky strategy that can lead to losses. It is important to avoid trying to time the market and instead focus on investing regularly in SIP mutual funds.


8. Keep Your Investment Horizon in Mind: Your investment horizon is the length of time you plan to hold your investments. It is important to keep your investment horizon in mind when selecting mutual funds. As a general guideline, it is recommended to maintain your investments in the market for an extended duration to achieve the best possible returns. SIP is an investment tool specifically designed for long-term objectives. While you can redeem your investments at any time, the real benefits emerge over extended periods. Investing for the long term allows you to ride out market volatility and benefit from the compounding effect. It also aligns well with long-term financial goals like retirement planning and wealth accumulation.


9. Use a SIP Return Calculator: Calculating the potential returns on your SIP investments is a crucial step for informed decision-making. An SIP return calculator helps you estimate how your investments may grow over time based on your contributions, the chosen funds, and the expected rate of return provided by you historical performance. It empowers you to set realistic financial goals and align your SIP strategy accordingly. Bajaj Finserv offers an online SIP calculator that can help you calculate the expected returns on your investments. However, such calculations does not factor the actual performance of the fund and should not be treated as any advice or assurance about the actual return of investment.


10. Expense ratio and commission: When investing in mutual funds, you should pay attention to two important factors:

● The Expense Ratio

● Commissions

The expense ratio can vary from one mutual fund scheme to another. A higher expense ratio means that a larger portion of your investment returns will be consumed by fees and expenses. Additionally, brokers or mutual fund platforms may charge a commission, reducing your overall investment.

However, platforms like the Bajaj Finserv Mutual Fund platform don't charge any commission, meaning you get to keep more of your returns, ultimately increasing your overall profits.

In conclusion, SIP is a great way to invest in mutual funds by following these ten tips, you may can maximise your returns and may achieve your investment goals. Bajaj Finserv Mutual Funds and Bajaj Finserv SIP are great options for investors who want to invest in mutual funds. Use the SIP return calculator to calculate your expected returns and invest in a mutual fund that suits your needs on the Bajaj Finserv platform.

Disclaimer:Mutual funds are subject to market risks, read all the scheme related documents carefully.

Moneycontrol Journalists are involved in creation of this article.

first published: Nov 10, 2023 04:00 pm

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