Increase SIP amounts by 8-12% every year: PPFAS Mutual Fund CIO Rajeev Thakkar
Inflows to systematic investment plans (SIPs) touched a record high of Rs 20,371 crore in April, the tenth consecutive month where inflows surpassed Rs 15,000 crore, reflecting sustained investors’ interest. Rajeev Thakkar, chief investment officer, PPFAS Mutual Fund, in an interview to Saikat Neogi, says retail investors should increase the SIP amounts over years in line with inflation and higher income.
Investing through SIPs has gained a lot of momentum. What should investors keep in mind to get higher returns over a longer period of time?
The key mistake that investors make is that SIPs are started in bull markets and tend to get stopped when markets fall. SIP stands for systematic investment plan and it is important to be systematic and disciplined. Further the SIP amounts should increase over years in line with inflation and higher income. Typically investors should increase their SIP amounts by 8% to 12% every year.
What kind of asset allocation strategy should an individual investor look for higher long-term returns?
Asset allocation should be driven by the investors’ circumstances like age, current financial position, goals and risk tolerance rather than the market outlook. To get a higher return, investors should not have excessive allocation to very short term fixed income securities if the investment duration is longer term. For 5-year plus investments, investors can look at equity investments and for medium-term investment horizons, investors can look at investing in hybrid funds.
As valuations in small and mid-cap stocks have become elevated, should investors reduce allocation in them and increase it in large-cap stocks/funds?
My recommendation is to choose a diversified mutual fund rather than trying to
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