As an increasing number of individuals start investing in the stock market, SIPs have emerged as one of the most popular investment choices. While SIPs simplify and automate the investment process, managing multiple SIPs simultaneously may be challenging. To manage SIPs, investors need clear objectives, strategic planning, and periodic portfolio reviews. This article offers a brief yet highly informative guide for seasoned investors on managing multiple SIPs.
Optimal asset allocation
If you’re managing multiple SIPs, the first step in your investment strategy should be outlining a clear asset allocation framework. You can choose how much of your assets are to be divided across large-cap, medium-cap, or small-cap funds. For instance, if you want a stable portfolio offering steady returns, invest a majority of your SIPs in large-cap mutual funds. On the other hand, if you are looking for aggressive growth, consider increasing SIP investments in mid-cap and small-cap mutual funds. You can also spread your investments across all three market capitalisations for better diversity.
Regularly monitoring and rebalancing
Another important step in managing multiple SIPs is to regularly monitor your investments. Reviewing the performance of your SIPs on a regular basis (monthly, quarterly, annually, etc.) can help you evaluate which SIPs are performing well and which SIPs are underperforming. Using a spreadsheet or digital apps can be a good way to understand and evaluate the performance of your SIP investments. You can then rebalance your SIPs once a year to remove the non-performing investments and replace them with investments that have shown positive growth.
Tax-saver SIPs
If you haven’t yet started investing in tax-saving SIPs, consider setting up tax-savings SIPs from early in your career. Investing in ELSS tax-saver mutual funds through SIPs can help you claim up to ₹1.5 lakh in tax deductions every year. Over a period of many years, this can help you save a substantial sum of money on taxes.
Goal-specific SIPs
You can also plan your SIPs to match certain specific financial goals. For instance, if you want to save up for a down payment on a house, set up a SIP with the aim to keep investing till you have enough for a down payment. Similarly, you can set up multiple SIPs for different financial goals such as marriage, children’s education, retirement savings, and much more.
Documentation and review
Make sure to maintain detailed records of all of your SIPs, including the starting dates, monthly investment amounts for each SIPs and financial goals if you have set up SIPs for specific goals. Consider getting in touch with your financial advisor to periodically review your portfolio and assess performance. Make sure to keep track of your SIP renewal dates and set reminders for major investment decisions.
To conclude
You can use multiple SIPs to diversify your portfolio or set up goal-based SIPs to reach specific financial targets such as saving for a down payment towards a house, marriage, children’s education, etc. Managing multiple SIPs may seem challenging but with proper financial planning, appropriate asset allocation, and meticulous performance tracking and rebalancing, you can make the most of your SIPs.
