You may consider a smart SIP portfolio in India or think of investing a lump sum amount. There are now various options available in terms of smart SIP funds and other mutual fund smart SIPs alongside. Whenever markets are at all-time peaks and hovering around these points, you should be more careful. Some experts feel that when you are investing for a prolonged duration, then you can invest a lump sum amount irrespective of temporary fluctuations owing to the coronavirus and other developments. However, several advisors state that investors should exercise more caution and instead check out options like Smart Systematic Investment Plans instead.
They recommend SIPs or Systematic Investment Plans which will enable staggered investments for comparatively lower market risks. Short term investment horizons are also not recommended for lump sum investments. It is not a good strategy to make investments in the best and most recommended schemes on the market without paying close attention towards the overall risk profile. You should choose SIP plans India that fit your investment goals and appetite for taking risks. If you are a smarter investor, you will naturally attempt at discovering ways and means for mitigation of the negative impacts of fluctuations in the market. One of the best methods in this regard is selection of SIPs or Systematic Investment Plans over lump sum investments. Rather than putting in a lump sum, you should stagger it throughout multiple smaller installment portions.
Choosing a systematic investment plan will give you the advantage of rupee cost averaging. This fundamental principle means that you will garner a higher number of units for a price which is comparatively lower. Whenever markets are moving downwards, you will naturally obtain more units of your scheme. Whenever markets are high, then you will obtain lesser units for the same amount itself. In this manner, you will find the average cost (per unit) coming to be lower as compared to when you invest in a lump sum manner.
Some other advantages of investing via SIPs
Smart SIPs enable dynamic allocation of monetary amounts every month, depending upon market circumstances. They may help you counter market risks and overall volatility in the present scenario. Investing a lump sum amount is not recommended majorly by experts in these uncertain times, particularly when the COVID-19 pandemic has greatly impacted overall economic recovery. If you are an investor who is savvy and smarter, you will naturally attempt at finding methods for countering the impact of fluctuations in volatile market situations. You should naturally go for SIPs over your lump sum investment. You will be dividing your overall risk outgo into installments likewise.
When you invest via the SIP route, you will naturally reduce your overall risks arising from volatilities in the market since you are averaging out your investments likewise. Whether markets are low or high, your investments will continue unhindered as a result. Also, unlike lump sum investments, you will not have to worry about timing the markets in these circumstances. Suppose there is a year when there is a general election in the country. Suppose you invested a lump sum amount into a suitable fund. You will naturally be tracking all developments including market movements likewise. In the SIP method, your investment will naturally do the job on your behalf. It continues even throughout volatile and fluctuating periods. You can thus readily spread out your overall risks throughout a longer time period without any hassles.
You can also customize investments in SIPs on the basis of your current financial outgo and scenario. Suppose you consider a smaller SIP investment which is in sync with your overall income. With increases in your income, you can also choose to scale up your contribution via SIPs likewise. This will naturally scale up the overall possibilities of accomplishing your personal financial objectives by ensuring the proper accumulation of sizable wealth for the future. You can also choose to increase your monthly SIP allocation with increases in your income. However, be careful that you do not encroach into money for household savings, basic savings (for enhanced liquidity), contingency money and so on. Any surplus amount that you have can be deployed via SIPs (systematic investment plans) for earning good returns in the future.
You can also have multiple SIPs in your investment portfolio although you will have to track the same carefully with financial advice and guidance alike. In these testing times, market experts strongly recommend opting for SIPs and even smart SIPs which ensure dynamic investment allocation. You should ideally refrain from making lump sum investments. These are only recommended if you are investing in ultra short term funds or similar debt funds with smaller tenures. However, even that may be a risky proposition in the current scenario. You should take proper financial advice before any investment as per experts.
