Your investment plan should be made keeping SIP’s and mutual funds in mind

Systematic investment plan also is known as SIP is a long-term investment which is beneficial for your financial goals. Basically, Sip is based on two concepts of which one is Power of compounding and second is rupee cost averaging. Investing through SIP is a bit different than other investing options as in this you cannot look for the highs and lows as it is just impossible to buy at the low and sell at the high and neither you can not time the market so with SIP the approach to be taken is holding your equities with a longer period of time. Longer you hold your SIP’s And Mutual Funds the more you will earn from those stocks because your principal with earn more returns thereby returning you even more and even the reinvested returns will work in favor for you through the power of compounding.

SIP’s And Mutual Funds

But surely situations will come when you should exit from your SIP to earn the maximum profits, these situations will depend upon following factors:-

1. Exiting or terminating your SIP should be done very wisely in order to earn maximum returns. If your equity or your Stocks has provided you bad returns for a while then it not means that you should pull yourself out from the investment instead you should wisely give your equities some more time let it be a minimum of 2 years to perform them well.

But if you find your stocks performing badly continuously then it is the time to exit the funds with your returns or may even switch to a fund that has chances of performing better in the market.

2. The second factor to keep in mind before terminating or exiting your funds is that sometimes there will be conditions when you will find that the objective of your invested fund is different from your objective as more often funds change their main objective to increase their performances in the market to get better returns for the investors in that case you should rather terminate your funds or switch your SIP to another fund.

 3. The third factor basically focuses on your comfortability with the changes made to the fund’s structure. For eg many times you may see that big fund houses often merge with bigger names for their profit and it may be possible that you are not comfortable with the new fund manager or overall with the changes made to your fund then that can be the situation where you may leave your current funds and can switch to new ones.

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