5 Smart Tips for Higher Returns with Best SIP Investment Plan

Investments in mutual funds can be either in a lump sum or through a systematic investment plan. Most often, SIP is considered an affordable way to invest in mutual fund schemes. It is convenient and safe as you have to invest only a fixed amount every month. It can be as low as Rs.500. Because it is an accessible investment method, you can take the plunge in the mutual fund's sector even if you are a young, first-time investor.One of the advantages of SIP is the rupee cost averaging, wherein you can buy more units when the prices are low and decrease the purchase of units when the price of units increases. This averages out the cost of your units and lessens the impact of short-term market fluctuations on your investments. In a way, you're protected from the market ups and downs.Another advantage of SIP is you can earn good returns. As a prudent investor, if you opt for systematic investment, you must know how to optimize or maximize the returns. Take a look at the five tips you can apply to maximize returns from the best sip investment plan .

If you're looking to earn better returns through SIP, it is best to select direct mutual funds. Direct mutual funds can be purchased directly from an asset management company (AMC) as it offers higher returns and has a low expense ratio as against the regular plans. For instance, if you choose to do a SIP of Rs. 10,000 for 20 years in a regular mutual fund, youmay earn a return of 12%*.However, if you go for a direct plan of the same fund, your annualised return would be at the rate of 13%*. This means you get to build a higher corpus by doing SIP in a direct mutual fund.
*(percentage returns entirely depend upon market volatility)

It is quite evident that financial problems can arise anytime. But with SIP investment, if you tend to withdraw or redeem the returns early, you will not be able to build much corpus. Besides, if you're exiting from the SIP plan at a time when the market is low, your portfolio value will become less. This means lower returns.

To optimize the returns, it is crucial for you to choose the best SIP investment plan . It is key to getting better returns. To choose the best performing fund, you should decide basis the risk, investment horizon, and the goals you're chasing or want to accomplish through the investment. Compare funds on various parameters such as expense ratio, performance consistency, risk, fund manager reputation, etc.

It is always said, one should start investing in SIP at a young age, precisely when you start earning income. For young investors, SIPs are an ideal way to build an adequate corpus with the compounding benefit. It helps a great deal in wealth creation. By starting small, you can earn a large amount of money in the long run. You can hike your investment amount as your income increases.

If you're keen on magnifying the return potential, you should apply some intelligence. This means you should dig the historical patterns of well-performing funds and the returns cycle. Learn from the past investing and make sure you use the SIP plan wisely to derive great returns.These are the tips you can use to maximise the return potential from the best SIP investment plan. If you have a short-term goal, SIP will not be helpful. It is best suited for long-term goals and objectives. It is a good way to start investing in mutual funds, for it helps you plan for the future by selecting the best investment options.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.