Using variable transfer plans (VTPs) instead of systematic transfer plans (STPs) can yield better returns for investors, says Gaurav Goyal, National Head - Sales & Distribution at Principal Mutual Fund.
Speaking at Cafemutual Confluence 2020 Investment Marathon, Gaurav said that one of the best ways to invest during volatile times is to make staggered lump sum investments. STP is one such solution to make staggered investments, while VTP is a smarter solution where investors buy more units when the market witnesses a sharp correction. As a result, it has been seen that the value of investment through VTP comes higher than STP, Gaurav said.
In fact, investors can avail the options of triggers which would help them overcome their emotions and biases. It automates the investment process such that the investment amount increases whenever the market witnesses a certain percentage of sharp correction. Similarly, MFs also provide triggers for capital appreciation to book profit and stop loss trigger to limit losses.
Gaurav also mentioned some of the smart SIP features that MFs offer at this point. One of them is naming the SIP so that there is a 'DilKaRishta' with the investments. He also mentioned 'SIP Booster' to increase SIP in the same fund to achieve financial goals faster and ‘SIP Pause’ to deal with uncertain times.
Among other smart solutions offered by the MF industry is global funds. Gaurav added that these funds allow investors to participate in the global growth story.
Finally, he advised investors to consult with their Krishna i.e. their advisor to achieve their financial goals comfortably.
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