5 Features to Look for When Choosing SIPs for Retirement Planning

SIP is now a popular choice among young investors serious about retirement planning. But just like any other investment option, you need to be as cautious as possible with SIPs, especially when you are just starting.

From child’s education, the down payment of a house, to buying a car, SIP in a mutual fund is now a go-to option for all the different types of objectives. A very popular reason due to which investors, especially young working professionals, now invest in SIP is retirement planning.

Young professionals are now increasingly concerned about their life after retirement. SIPs with their flexibility and excellent returns potential have attracted a large number of such professionals. But just like any other type of investment, you need to be as cautious as possible when starting your SIP journey.

Read the tips discussed below to start investing through SIP in a safe and rewarding way-

1. Type of Mutual Fund

There are many different types of mutual funds like equity, debt, tax-saving funds, ETFs, funds-of-funds, balanced funds, money market funds, and diversified funds. All the different types of funds offer the SIP facility. But while starting a SIP is easy, selecting the right fund is not.

Consider factors like your objective, risk appetite, and age to make the right decision. Once you’ve selected a type of fund, compare the schemes in the category based on their past performance and benchmark index to pick a promising scheme.

2. Selecting the SIP Amount

Once you’ve chosen a mutual fund scheme for your SIP, the next important consideration is the SIP amount. While SIPs allow you to start investing with just INR 500, you should keep your investment objective in mind when selecting the amount.

At the same time, the amount should be as such that you could easily afford it every month. This would ensure that you never miss a single SIP.

3. SIP Interval

When you register for SIP in a mutual fund scheme, you’ll be required to select a SIP interval. You’ll have options like weekly, monthly, quarterly, and annual. While monthly duration is the most popular choice, you can also go for other durations if they better suit your needs.

Remember that AMCs do not charge any additional fee for the SIP facility. It is free of cost, and you can start or stop your SIP any time.

4. Increase the SIP Amount As and When Possible

Nothing is constant in life, and this applies to your investments too. As and when your income increases, you should try to increase the SIP amount too. Even an increase of 5%-10% every year or two can have a significant impact on your overall portfolio.

It is not necessary to keep investing the increment in the same scheme. You can also look for other plans to create a diverse portfolio.

5. Review the Portfolio Regularly

If you’re planning to invest in SIPs for retirement planning, one of the most valuable tips is to review your portfolio at regular intervals. This does not mean reshuffling your portfolio every week or month.

You should review the investment every six months or so and make the necessary changes if required.
Starting SIP in mutual funds for retirement planning is now easier than ever. Everything can be done online within a matter of minutes. But while starting SIP is quick and simple, there are a lot of things that one needs to take into consideration. Remember the tips discussed above, and you’d begin your SIP journey in the best possible way.