Best tips to find the best mutual funds for SIP

Posted by sipnowbsl on March 7th, 2017

Mutual Funds has been one of the safest and best investment tools for retail investors. It gives the average retail investor the advantage of leveraging on a qualified fund manager to take care of the money invested and make it grow. While it is popular and quite easy, you still need some tips to ensure you make most of it. Keep reading!

There are plenty of ways to make money in the economy currently. With people having a surplus every month, it can be difficult to save up when you have the money at your disposal. This is why one of the best ways to advance your wealth and save up at the same time is through investment schemes. While it can be difficult to know if it is the right time for investments, SIP mutual funds are there to help you with that.

When you opt for SIP mutual funds, you are choosing the fund house to invest in different stocks and units for you. This means that you will get better returns as the fund houses have the data and the knowledge to choose the right form of investments. However, there are a large number of SIP mutual fund schemes to choose from so if you are not sure which is the right one for you, here are few tips to help you narrow it down:

1. Risk assessment

When you look out for the best mutual funds for SIP, you should also look at the risks that come with each scheme. SIP and mutual funds normally have a lower risk factor than equity investments, but they still have some risks. Consider the kind of risks that each mutual fund scheme takes on and depending on the amount you can handle, choose the scheme accordingly

2. Your objective

Before you decide to go ahead and invest your money in a SIP mutual fund, you should have an objective of why you are investing the money. If you are looking to save money for traveling or weddings and more, then it is a short term goal, and you will be able to find the right kind of mutual and debt fund that will give you maximum returns to accomplish this objective. However, if you are looking at your child’s education, buying a home or a car and more, they are termed as long-term goals, and you need to find mutual and equity schemes that cater to this.

Knowing your objective will help you find the scheme that will benefit it positively.

3. . Performance of the fund

Before you zero in on any mutual fund scheme, you should check out how it has done in the previous years and the kind of returns it has given. This will help you get an idea of the kind of investments the mutual fund houses make and the returns they make from it. Equity funds have more volatile returns so if you are not looking to be risky; this is something to avoid. Along with this, you will understand how consistent the fund house is with good returns and can choose accordingly.

4. Expense ratio

The more you can save on the recurring cost and expense ratio, the more you can save in the long run. This is something that a lot of investors miss out on before they invest so make sure you check out the different rates offered by the mutual fund houses before choosing the right one for you.

5. Research

Before you go ahead and invest in a mutual fund house, check out how the house has been performing in the past few years. Along with this, do a little research on your fund manager as well. If you check out their portfolios, you will see the kind of investment opportunities they take and the kind of market and units they invest it. With a consistent report on the risks and returns, you will be able to assess the house and well as the manager and see if you are making the right choice.

6. Duration of the SIP

Since most people prefer to go for mutual fund investments through a SIP, check out the different returns you get for the time you are considering to invest in. A longer investment always gives you better returns so choose the mutual fund scheme that suits these needs too.

If you follow these six points, you can easily narrow down the SIP mutual fund schemes to ones that will give you a good investment as well as returns. Make sure you follow the tips and get started on your savings today!