New Delhi, Jan. 6 -- If you are a regular mutual fund investor, it is essential to build your portfolio strategically. Many investors buy mutual fund units when valuations are high. Unfortunately, this often lowers their overall returns.

To avoid this, it is recommended to buy mutual fund units at different price points. This "averages out" your purchase cost. The most effective way to do this is through a Systematic Investment Plan (SIP).

For the uninitiated, SIP is a mandate given to the Mutual Fund (MF) house to deduct a certain sum from your bank account and invest it in a specific scheme at regular intervals, i.e., every month or every week, etc.

Let us understand this with the help of an example. Suppose you want to invest Rs.5 l...