SIP Archives -

19 Dec

Myths of Mutual Funds SIP

Finheal
Mutual Fund
Tags: investment in mutual funds, mutual fund SIP, NAV, SIP
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Mutual Funds are enormously popular among investors, but do you be acquainting with how much of the information that people speak about MFs are just mythology? Maybe it’s time to put the record straight and get your facts accurate.

Mutual Fund SIP is a popular term in investment circles even although there is a definite air of confusion surrounding it. You require understanding that it is not an investment but a technique of investment in mutual funds. It is just a policy that will help out you invest better and maybe while trying to apply this method, you be supposed to be conscious of the mythology that surround it.

Myth 1: SIP stands for Small Investors Plan

One of the main and easiest myths that surround Mutual Funds SIP is this. Investors believe that it is for investing lower sums of money, but actuality is it is just a very well-organized and long-term investment plan which does not actually gets limited by amount per use. It is necessary that one should recognize that the money is invested into in a fundamental asset in a usual disciplined manner.

Myth 2: A Fund with Lower NAV (Net Asset Value) is improved

People often get the wrong idea that the NAV of a mutual fund is similar to market prices of stocks. Many mistakenly buy mutual funds with a low NAV like they buy stocks at cheaper prices. This incorrect view stems from the belief that low NAV values are associated with a potential of increased returns.

Myth 3: Halted Mutual Fund SIP leads to punishment

Many investors believe that if you commit to an investment for a long tenure, you cannot change anything; neither the amount, nor the tenure and doing so will result in punishment. But in actuality you can do all that by just giving a written request and you will be able to change the tenure, amount and even the fund type. If you really want to change the fund, you can stop the existing SIP and switch to a new SIP.

Myth 4: SIP is not working (Returns are low!)

People review their investments by their returns. So, this myth stems from the detail that people look at their total returns after short intervals. SIPs are first and primary based on Internal Rate of Return or IRR of the investments. In the short term the complete returns clearly stays lower than the IRR because you spend in SIPs from time to time as an alternative of investing at one go. If you want to have good returns, then investing at regular intervals through a long term period.

Myth 5: Mutual Fund SIPs are only Long Term

Investors get actually puzzled and this seems to be a well-liked myth those requirements to be busted. Mutual Fund SIPs can be enrolled for six months if require be and that is the minimum tenure. But the investments in that tenure require being long term in nature. Despite the fact that the investment time can be short term, the holding time carried out through mutual fund SIP should be long term.

21 Nov

Systematic Investment Plan (SIP) V/S Equated Monthly Installment (EMI)

Finheal
Mutual Fund
Tags: EMI, investment, personal Loans, SIP, Systematic Investment
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A lot of investors think SIP as EMI’s. This creates an insight that SIP is amazing like an EMI (Equated Monthly Installment). This is wrong. To a certain extent not anything can be additional from the truth. Youth of now is more paying attention into the EMI, be it for a smart phone or a holiday or a fancy laptop. Whereas a SIP, is the finest form of investment.

EMI (Equated Monthly Installment) is expensive and at times striking consumption, and SIP is an investment.

Given below is the comparative analysis on SIP v/s EMI:

The Nature of the Scheme: SIP is the systematic investment of the investor’s funds in the form of stocks or equity funds for a fixed period of time. Although it gives late approval as the return to be pending after a precise span of point in time, it is a fast tool for capital formation.

In case of EMI, you pay interest to finance for business, a product you desire to own. In case of a SIP (Systematic Investment Plans) you make a periodic investment of your own money to create wealth or meet one or more of the financial objectives that may be significant to you.

EMI comes with a load in mind, whereas SIP doesn’t.: EMI (Equated Monthly Installment) is a set outflow of cash for a fixed period of time. Any default or delay leads to severe interest and default may lead to harassment and frantic calls from the financier and his recovery agents. This creates stress. Sometimes the expenses for a particular month increase and it becomes difficult to pay the EMI. This may cause sleepless nights. EMI can never be compromised at the cost of other expenses, no matter how important.

SIP (Systematic Investment Plans) is totally different. Even if you fail to notice a month or 2, your investment stay intact and the mutual fund company doesn’t not charge you even a single rupee. You can suitably stop your SIP any time and even add to or reduce the amount.

Investment Discipline: SIP helps to make and uphold the investment discipline. You may accomplish your wishes for significant financial objectives like owning a house or your child’s higher education. Though, an EMI doesn’t make any long term asset somewhat you are capable to have enough money a product you may like or require. Another thing is that the EMI can be devastating if used for personal loans or for abroad vacation which may be unreasonable particularly in times of financial bad luck like losing a job etc.

Hence, although EMI plays an important role when you can’t stay to pay money for hard to believe that you may need, in SIP you can purchase the similar product or maybe amazing improved but at a later date and in a more systematic manner.

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