SIP Tips: Are you investing in mutual funds through SIP? Risk and other factors you need to know before investing
Mutual Funds SIP Risk Factors: Investing Mutual funds have less risk as compared to investing directly in the stock market. But this is a market-linked scheme and is not risk-free.
Mutual Funds Investment Risk Factors: Even today, there are many people who do not invest directly in the market because the risk in the market is very high. While one's money can grow in the market, it can also decrease at the same speed. Mutual funds are a better option for such people. Mutual funds have less risk compared to investing directly in the stock market. But this is a market-linked scheme. It is not risk free. Therefore, if you are going to invest in mutual funds through SIP, you need to understand some things related to it. Even in the event of market uncertainty, the risk in mutual funds is considered to be low. The main reason for this is that the money in mutual funds is invested based on the experience of the fund manager. This increases the chances of better returns and the risk is reduced significantly compared to investing directly in stocks. But this risk is not completely eliminated.
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Selection of funds is very important
The biggest risk of mutual funds is the stock market itself. However, the risk depends on the type of fund your money is invested in.
Selection of funds is very important
Investing in large-cap or blue-chip funds may reduce the risk, but if you are investing in small-cap funds with the possibility of good returns, the possibility of loss increases since they invest money in companies with a high market risk.
Do these things to improve average returns
There are many types of schemes in mutual funds. Expert advice is very important to know which scheme will give you good profit because if the scheme in which you are going to invest is already giving very good returns, inflation will not have much effect on it and you will make profit, but if the scheme in which you have invested has low returns, then due to inflation, its inflation-adjusted value decreases.
Do these things to improve average returns
In such a situation, you don't make much profit. This is the reason why experts advise to invest in different schemes on the basis of different risks and returns. So that, your average return remains good.
Changes in interest rates are also a big risk
Changes in interest rates are also a big risk for debt mutual funds. To get better returns, you have to look at many other factors along with the increase or reduction in interest rates while choosing the scheme. Experts believe that debt funds perform better when interest rates fall.
How to choose the best mutual funds
Make a list of the top contenders for the best mutual fund and compare them. Keeping in mind the goal for which you are investing in mutual funds, check which one is meeting your needs. Compare their history, expense ratio, fund manager history, etc. This will help you a lot in choosing the best SIP as per your need.
Consult a financial advisor
If you have no idea about investing in mutual funds, or even after following all the instructions mentioned above, you are unable to take any decision, then talk to a financial expert.
Consult a financial advisor
They will help you choose the best SIP according to your needs. If you choose the right SIP for yourself, you will get better returns and will never regret it.