3 Lesser-Known Secrets about SIP in Mutual Funds | SIP for Wealth Creation #Finance

sip is the best way to invest you must have heard this many times even if you don’t invest in mutual funds but this statement is not entirely true in sips you might make some mistakes that you may only realize after many years and by then you might have already incured significant

losses hello and welcome to our Channel 5 minute Finance by ET money where we talk about the basics of investing and personal bold; color: #1a73e8; text-decoration: none;">Finance today’s CashNews.co we’ll share three lesser known secrets of sip with you these secrets will help you make the right decisions in your investment Journey so let’s get started without any delay sips don’t

guarantee better returns in simple words not everyone who invests in sip gets the same returns you heard that right when we use an sip calculator we usually calculate returns based on 12% we take 12% because in the past nifty50 has given such returns but as we mentioned not everyone gets the same

returns it’s possible that if you plan your Savings based on 12% you might end up disappointed in the future let’s understand this point with past sip returns we checked what returns would you have gotten if you had invested in nifty50 through sip for 10 years starting

from the year 200000 so if an investor started an sip on 1st January 2007 after 10 years he or she would have received 9.35% Returns on the other hand if someone started in 2008 the 10-year returns would have been 12.1 3% if you look at the range of returns it varies between 9.35% to 22.6 2% this

means your returns depend on market conditions and a bit on your luck if you think you are guaranteed 12% returns that’s not the case you also need to be mentally prepared for returns in the range of 9 to 10% and this leads us to our next Point most investors focus on returns they chase top

performing funds to get better returns this is a fair point returns are important but what’s even more important is how much you invest let’s understand this with actual examples in the last 10 years parag parik flexi Cap Fund has been a top performer and K flexi capap has also done

really well but its return is about 5 percentage points lower than parag Park’s fund so if you had invested 5,000 in the parag par flexi Cap Fund through sip for 10 years you would have received a 21.8% return and the value of your investment would be around 19 lakh rupees now if you had

invested 7,000 rupees in CK flexi Cap Fund which gave us 17.3% return over 10 years your investment would have grown to around 21 lakh rupees no one knows how a fund will perform in the future we select funds based on their past performance but it’s possible that in the future that fund may

not perform well that’s why your focus should be more on the investment amount rather than just the returns so whether you earn 9% return or 15% investing a higher amount will ensure that you can comfortably reach your targeted amount one more thing investing in top performing funds is not

the only way to build a large Corpus if you regularly increase both your Income and your Investments you can still do well and to be clear we are not talking about staying investing in underperforming funds what we are saying is that it is impossible to be in the

top performing funds all the time so your strategy should be to keep increasing your sip amount whenever the market Falls people rush to make lumpsum Investments hoping to get good returns but if you look at the returns you’ll realize that this strategy only works in a 7 to

10 year period if your investment period is longer like 15 years this strategy does not work in a 15-year period if you combine sip with lumsum investment there isn’t a very big difference in returns as we checked if someone invest through sip for 15 years their returns would be 13.78% but

even if the investor makes a lumpsum investment during a 5% or 10% Market correction their returns would still be similar but if you are only looking at returns that’s only half the picture lumsum investing makes a significant difference to your final Corpus for example if an investor invests

10,000 rupees per month through sip for 15 years their Corpus would be around 55.4 lakh rupees with returns of 13.78% now if that same investor invests and an extra 1.2 lakh every year during every 5% Market correction the returns would still be 13.77% but the final CPUs would grow to 1.1 CR rupees

so sip plus lumpsum is better than just a simple Sip and this adds more weight to our previous Point investment is more important than returns so if you can make lumpsum Investments along with your regular sips you should not hesitate to do so and if you can’t you can still

increase your sip amount every year to understand the Sip plus lumsum strategy in more detail you can watch our other CashNews.co the link is in the description and with this we have come to the end of this CashNews.co if you found it insightful please make sure to like And subscribe we’ll

see you with another insightful CashNews.co soon mutual fund Investments are subject to Market risks read all scheme related documents carefully