5 things about sip that every investor should know

a systematic investment plan (sip) is a planned investment approach through which you can regularly invest a preferred amount into your sip account, which is used to buy mutual fund units of your choice. as an investment method, it instils discipline into your saving pattern and can reap an attractive yield in the long-term. by starting early, you can achieve your savings goal through sip, and you can estimate it beforehand by referring to a sip calculator as well.

before investing in a sip, you can pay attention to a few things mentioned below.

1. finalise a saving goal
   
   many people invest in sip as a means to save tax or invest their surplus cash. they don't decide on a particular financial goal or an investment duration. however, the first thing you should decide is what you want in return for your investment. this will decide the rest of the factors, like duration, amount, asset class etc. your sip corpus can be used to purchase a house, finance the higher studies of children, finance your post-retirement cash flow and so on. the requirement of these goals can be the financial goal of your sip.
   
2. decide your investment duration
   
   depending on how you plan to use your sip maturity amount, your investment may be short, medium or long-term. in a short-term investment, you will have a very short window to insulate your investment from market uncertainties. however, longer the duration, more are the chances of your fund balancing out the market's ups and downs. besides, you also stand to enjoy a larger return due to compounding of returns in the long run.
   
3. choose the asset class to invest in
   
   if you are investing for a longer duration, you can invest in equity funds and benefit from long-term market growth. if the investment period is shorter, you can increase the debt fund in your investment to keep the sip investment safe. the asset class to be selected will also depend on your expectation from the investment. if you are open to risks, you can keep a higher equity exposure even in medium or short-term sips.
   
4. decide the amount of contribution
   
   while deciding the periodic contribution, it is worth checking how your sip investment grows using a mutual fund sip calculator. besides, your sip contribution is a regular burden on your budget, so you should decide on your comfortable amount.
   
5. choose the bank and payment date
   
   time your sip contribution date with your salary or regular income receipt date so that your bank account is not short on cash on the deduction date. also, check the bank's services and user experience through which you plan to operate your sip.

with these factors in mind, you can make the right sip decision and accumulate the corpus you aspire for. cred's sip return calculator is there for you to give you an estimate of the corpus and what you need to do to achieve it.