6 mutual fund SIP secrets and how it can impact your returns

economictimes.indiatimes.com:

SIP (systematic investment plan) is turning into a behemoth. Retail investors with small ticket sizes continue to plough big money into mutual funds in auto-pilot mode. As per the data from the Association of Mutual Funds in India, new SIP registrations for the month of June hit a record high of 27.8 lakh, taking the total SIP accounts to 6.7 crore.

The monthly SIP inflows crossed Rs.14,000 crore for the second consecutive month. Clearly, investors are now sold on the benefits of SIP discipline. While it is common knowledge that long-term investment in mutual funds through SIPs helps navigate the market ups and downs, there are other facets of SIPs that are still not fully realised or appreciated.

As the SIP culture is embraced by investors, it is crucial that they know what to expect when they take this journey. The path to success with SIPs is not linear. If you set your expectations right, it will help maintain your investing resolve and allow SIPs the time they need to yield the desired outcome.

Here, we outline certain critical attributes of a typical SIP throughout its life to help you better understand and navigate the path you are on. The longer the SIP term, the better the outcomeHistorical data suggests SIP delivers positive outcomes over 8 years or longer time frames.1.Slow start can be a good start The early years of a SIP can be a real test for your investing discipline. How the market behaves in this phase is not so critical for the investing outcome, but how you behave in response to the market’s vagaries will make all the difference. Given the volatility in equities, there will be times when the market will trend lower or sideways.