Getting into the world of SIPs (Systematic Investment Plans) when you’re just starting out can feel like taking the initial steps on a lengthy journey. India, with several investment options, offers a vast range of SIPs tailored to various needs.
- Starting Point – Risk Appetite: Much like selecting between the calm plains of Rishikesh and the challenging terrains of the Himalayas for your journey, determining your risk appetite is the first step. Are you okay with market fluctuations or do you prefer stability? Equities offer growth potential but come with associated risks, while debt funds tend to be more stable.
- Track Record of Performance: Reviewing the past performance of a fund gives you insights, similar to consulting past pilgrims on their journeys. It provides a glimpse of how the fund has managed during market highs and lows. As Warren Buffett wisely said, “It’s only when the tide goes out that you discover who’s been swimming naked.”
- Expense Ratio and Other Charges: A low expense ratio is akin to reducing the baggage you carry on your journey. It ensures more of your money is invested rather than spent on managing the fund. Yet, remember that a slightly higher ratio might be justified if the fund consistently delivers better returns.
- Investment Horizon: Since you’re looking at a timeframe of 7 years, consider funds that match this horizon. In investment circles, 7 years is often seen as long term, so equity-oriented funds might be suitable.
- Consult a SEBI Registered Investment Advisor: When embarking on a journey, it’s always beneficial to have a seasoned guide. A SEBI Registered Investment Advisor can steer you towards SIPs that fit your objectives and risk profile. They can also help align your investments with the Roots (for strong foundational elements) and Wings (for growth) philosophy.
Given your monthly contribution and tenure, large-cap and diversified equity funds can be a good starting point. But it’s essential to periodically review and possibly rebalance based on market conditions and personal goals.
In conclusion, with careful planning and guidance, SIPs can be an excellent route for wealth creation. And for those seeking more personalized advice, consider Jama Wealth’s PMS services and its associate investment advisory offerings.
