SIP (Systematic Investment Plan)

SIP is an investment plan which is systematic so it is called systematic investment plan. It means to invest plan with regular investment over a period of time. Say monthly SIP means you invest every month, here you buy every month on a fixed date and market may be lower or higher on that particular date.

The Mutual Fund Sahi Hai campaign also helped Mutual funds and SIP to gain popularity in India.

For those who thinks SIP is an investment, we need to clear that SIP is not any investment plan/scheme, it is only a tool to help investor in making regularly investments in Mutual funds.

SIP is most popular among salaried individuals.

  • It brings Financial discipline to your life.
  • SIP starts with as low as Rs. 500/-.
  • No need to time Market.
  • Benefit from Averaging Cost of Investment.
  • Option to Stop or Skip SIP anytime
  • Auto debit option directly from bank on a fixed date.
  • SIP amount can be increased or decreased at anytime.

 

  • Those who are planning for a long term perspective & Long term investment Goals i.e. either for their retirement or Child education or child marriage can go for equity SIP. The longer the tenure of SIP the better the benefit will be.
  • If your investment tenure is shorter than you can rely upon liquid fund or diversified equity fund. Sectoral funds should be avoided.
  • Equity SIPs are basically framed for long term, they shows power of compounding. The longer your SIP sustains the more rupee cost averaging works in your favour.
  • In general look all equity funds may look similar and equal to you but believe me they are not. Look for consistency of return on your investment. Also check for the team handling the fund and in case team is changing too often than avoid that fund.
  • People usually commit some mistakes, they reduces the amount of their SIP when market is up and increase it when the market is down but this a wrong philosophy, you can’t time the market. Just stick to a defined amount and time to invest and let the power of compounding and cost averaging do the rest.
  • Check the returns of SIP with Index returns. Your equity SIP must outperform index by a reasonable margin. If your fund is not performing better than index than its time to switch and trust me it works.

SIP means Systematic Investment Plan.

SIP can be started with as low as Rs. 500/-.

Yes, you can modify amount as per as time of SIP as per your convenience. It can be monthly, Bi monthly or Quarterly.

No, only investment in SIP into ELSS funds is tax free under 80C of income tax act while other SIPs do not carry such deductions.

Only investments in ELSS SIP carries lockin of 3 Years other equity fund SIPs do not carry such Lockin Period.

  • It brings Financial discipline to your life.
  • SIP starts with as low as Rs. 500/-.
  • No need to time Market.
  • Benefit from Averaging Cost of Investment.
  • Option to Stop or Skip SIP anytime
  • Auto debit option directly from bank on a fixed date.
  • SIP amount can be increased or decreased at anytime.

Investors should start investing in Mutual Funds with start of new financial year through equal monthly SIPs, it helps you averaging the cost of Investment.

As you are investing on a fixed date through SIP, you do not need to time the market.

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