A systematic investment plan( SIP) is not an investment option, it is a method of investing in mutual funds. Like your RD in your savings banks. In regular mutual funds, one needs to invest a lump sum like FD’s. So SIP is the RD in mutual funds. Where you can invest a fixed amount monthly in your mutual fund and create a large corpus fund along a time period.
So it makes you to create a savings habit like a piggy bank and gives you good returns over a period of time.
Once you signup for a SIP, the amount will be automatically detected every month from your bank.
How to start investing in SIP??
It is the same process you follow to invest in a mutual funds. The only difference is the method you select in investing.
After you select the mutual fund to invest , you select the SIP option on your investment method. Where your desired amount will be detected automatically from the bank you link.
Most popular mutual funds where you can start a SIP’s are
- Axis Blue chip Fund Direct Plan Growth
- Nippon India Pharma Fund
- ICICI Prudential Technology Direct Plan Growth
You can also check the best SIP plan.
What are the types of SIP’s ??
Top-up SIP
This SIP allow you to increase or decrease the investment amount according to your savings. Like you invested Rs 5000 this month , you can invest Rs 6000 next month or any other month accordingly.
Flexible SIP
This is most opted SIP type because this SIP allows you to go flexible , like you can pay according to your financial plan. You can decrease or increase your SIP investment any month or you can even skip paying. Its all according to your monthly financial position.
Perpetual SIP
Generally SIP plan has duration of 1,3,or 5 years. In this SIP type there is no end date for your investment. You can choose when to end your SIP investment. You can withdraw when ever you need or when your financial goal is achieved.
Trigger SIP
This SIP is not advisable for us, because this SIP is for people who follows the financial market and make living out of market condition. It is mostly done by setting up a index value or a date to start and stop .
Why many are opting for a SIP ??
Over a period of time SIP became an active investment method among Indians. Because of the flexibility, one can start with a smaller amount and returns were also good ranging from 10-15%.
Since mutual funds come with lesser risk and decent returns people could actually choose SIP from their regular savings.
The returns in SIP are compounded, so your investment keep growing.
There are SIP’s which are goal-oriented where you can set specific financial goals and start a SIP.
However, you know mutual funds are managed by experienced managers they promise minimum returns. You won’t have tension to follow the market and make decisions. It all will be done by your asset manager.
In the current scenario SIP has become the best alternative for investment, where consumers are buying SIP’s rather than a luxury car has affected the luxury car makers like Benz.
It is good to see people going for savings mode rather than spending on a depreciating asset.
Kindly select your SIP carefully, because you know mutual funds are subjected to market risk.
Stay tuned…..
A really helpful post!
Thank you so much , i hope it helps. Feel free to ask any doubts 🙂
I really wish I had come across this post earlier. But I did hours worth of painstaking research and finally started multiple SIPs. Thanks for the offer. Now I know where to come if I’ve got a doubt or two 😃
Your always welcome 🙂
😃