Every investor wants to make the right financial decisions to maximise their returns and secure a comfortable future. However, emotions, advice from friends, market timing, and panic investing during market volatility can influence investors’ judgement and lead to impulsive decisions that may not align with their long-term goals. Here, a systematic investment plan (SIP) can help.

SIPs offer a disciplined approach to investing, allowing investors to invest periodically in instalments for various goals, such as wealth creation, retirement planning, travelling, and child education. Many investors find this approach useful, as it helps them inculcate a savings habit while ensuring that their money is invested in a diversified portfolio.

Although SIP has many benefits, such as reducing the impact of market volatility, low investment amounts, auto payments, no market timing, and disciplined investing, there are some smart ways to maximise your returns. Let’s discuss them in detail below.  

• Invest in best performing funds

Compare different SIP mutual funds to identify which ones have consistently performed well in different market conditions. Read the scheme-related document of every fund to understand its asset allocation, expected returns, management team, minimum subscription amounts, cost structure, and risk factors.

Examining scheme details helps you select funds that align with your goals, be it wealth creation, capital appreciation, or income generation.

• Link your SIPs to multiple goals

When you invest in SIP with a goal in mind, you are more likely to remain committed to your investment plan and stay invested for the long term. Linking your SIPs to financial goals like buying a house, planning for retirement, or funding your child’s education helps you set realistic investment amounts to achieve these targets. This makes it easier for you to create a disciplined investment plan and an exit strategy beforehand.   

• Use SIP calculator

An online SIP calculator helps you estimate the growth of your investments after the SIP tenure ends. Enter your investment amount, tenure, and expected return rate, after which the tool will display results showing the amount invested, interest earned, and total value at maturity.   

Suppose you invest Rs. 5,000 per month in an SIP with a 12% annual return rate. Using the SIP calculator, you can see that after 10 years, your investment may grow to approximately Rs. 11.61 lakhs. This information helps you set realistic goals, adjust investment amounts, or opt for funds with higher growth potential to maximise your SIP returns with SIP return calculator

• Step up your SIP  

As your income grows or finances improve, you can increase your SIP amount over time through a step-up SIP (also known as top-up SIP) facility. It involves an automatic predetermined percentage increase in your monthly investment.

Let’s say you start an systematic investment plan of Rs. 7,000 per month. After a year, if your salary increases, you can opt for a step-up SIP of 10%. This approach helps you invest as per your financial capacity and accelerate your progress towards your goals.

• Have a long-term approach and keep investing despite market conditions 

During market volatility, do not panic and stick to your strategy. In fact, market downturns can present opportunities to invest more and take advantage of market fluctuations through rupee cost averaging.

For example, when COVID-19 pandemic hit, financial markets experienced high market volatility. This caused many investors to panic and sell their investments. However, those who stayed invested in SIPs and other investments benefited from the market recovery. Thus, most experts recommended maintaining a long-term approach with SIP and not being influenced by short-term fluctuations.  

To unlock the full potential of your SIP investments, it is important to adopt a calculated approach and long term mindset. That means being a smart SIP investor and having a clear understanding of different SIPs, market trends, and investment opportunities that market volatility brings.