How often have you made a New Year’s resolution or set goals and stuck to it?

You know, resolutions like…

✔ Exercise daily
✔ Lose Weight
✔ Eat healthy
✔ Spend less time on social media
✔ Save more / Invest more

The list can go on; however, only a few individuals are able to stick to the resolutions and achieve their goals.

The main reason why 90% of resolutions fail is because that the goals are poorly set or lack a process-driven approach.

Regular readers of PersonalFN would be aware that we strongly advocate the need to set SMART goals. Goals that are –Specific, Measurable, Adjustable, Realistic, and Time-based.

In fact, even when individuals set clearly defined goals, there is only a 50% success rate. One of the main reason behind this, researchers have found is that many people quit because the goal is too big requiring too much effort and action all at once. In short, to follow through on a resolution, takes more effort than people anticipate, and they easily give in to their behavioural biases.

Therefore, when you decide to “Save for daughter’s higher education worth Rs 12 lakhs in 5 years,” the effort behind investing every month, paperwork, market volatility, media noise, behavioural biases, and much more in between can detract you from your goal.

How do you deal with all this?

This is where a Systematic Investment Plan (SIP) comes in.

A SIP is the most convenient and efficient route to investing in mutual funds. All you need to do is pick the right and the best mutual fund schemes, set up a SIP, and relax. The monthly or quarterly investments not only help to create a regular savings habit, it deals with market volatility and is devoid of behavioural biases.

PersonalFN further elaborates on the top three reasons why you should invest in mutual funds through SIPs...

1. Set up and relax
   
   Thanks to advancement in technology, setting up a SIP in almost any mutual fund can be done from the comfort of your home. Even if you are a first time investor, the once long drawn process of Know Your Customer (KYC) can be easily completed using your smartphone. Several fund houses have even launched mobile apps through which you can invest on the go. You can begin investing through a SIP with a few simple clicks.
   
   All you need to do is:
   
   1) Pick the right mutual fund;
   2) Fix the monthly or quarterly investment amount;
   3) Set a pre-specified instalment date, for example, the 5th or 15th of every month/quarter
   4) Define your investment horizon
   5) Setup the bank mandate – and you’re done.
   
   Once setup, there’s no need to remember the monthly or quarterly instalment date, the investment will get automatically deducted from your bank account.
    
2. Deals with market volatility
   
   One of the biggest benefits of investing via a SIP is freedom from timing the market. SIPs can help you manage (even-out) the market volatility well. The volatility is mitigated through rupee-cost averaging.
   
   Under rupee-cost averaging, you would typically buy more of a mutual fund unit when prices are low, and similarly, buy fewer mutual units when prices are high. This infuses good discipline because it urges you to commit cash at market lows, thus enabling you to lower the average cost of your investments. The regular monthly investments will automatically average out the costs, while the time in the market will allow your investments grow through compounding.
    
3. Devoid of behavioural biases
   
   When your investments in mutual funds through SIP are aligned to your goals, it will stay on track irrespective of the market movements. If you had invested on your own, you could end up altering your planned investments based on the whims and fancies of the market. More often than not, you may have contemplated whether to invest now or redeem your mutual fund units.
   
   Proceeding with such decisions without keeping the long-term view in mind can ruin your financial plan. Hence, the SIP route helps keep your plan on track by drowning out the noise and maintaining a long-term focus.
    

Clearly, SIP ping into mutual funds with all these benefits and much more, will help achieve your financial goals.

But a SIP is just the method of investing. You need to choose the right and the best mutual fund schemes capable of generating long-term wealth.

How do you pick the best mutual funds to SIP in?

Well, the wait is finally over.

PersonalFN has launched the Exclusive Report on SIP-worthy mutual funds— The Super Investment Portfolio – For SIP Investors.

After our rigorous shortlisting process, we go a step ahead when picking funds that are SIP-worthy. Under this, PersonalFN conducts a detailed analysis on how SIPs in the top shortlisted funds have performed, across multiple market conditions and timeframes. Only those funds that successfully pass this evaluation are chosen.

Don’t miss out on early bird discounts. Subscribe to the report here.
 

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digvijaysingh.bhati18@gmail.com Feb 07, 2019 How do i choose a long term mutual fund investments SIP i have to start the investment.
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