Plan (SIP) has gained immense popularity over the last decade. There are
currently around 6.05 crore SIP accounts in India!
SIP is one of the
best options for people who want to invest in mutual funds online in small amounts at regular intervals instead of lump
sum amount at once. SIPs leverage rupee cost averaging and compounding
principles to lower the market risk and generate good returns in long term.
There are different
types of SIP options that you can consider:
This is the most
basic and simplest of SIP. You can invest a predetermined amount in SIP every
month, quarter, or six months. There are even daily, weekly and bi-monthly
SIPs. The SIP amount remains fixed and equal. You just need to give a standing
instruction to your bank to debit this amount from your savings account and
credit it to the mutual fund house.
If you are investing
in SIP for the first time, it is advisable to use the SIP goal
calculator. It will give you an idea about how much you need to
invest to earn returns as per your financial goal.
2. Flexible SIP
Regular SIP doesn’t
allow you to change the amount unless you discontinue it and start a new one.
However, flexible SIP allows you to increase or decrease the amount as per the
market conditions or your investment goals.
It is important to
inform the mutual fund house about the change at least a week before the
This type of SIP
enables you to increase the SIP amount regularly. For example, you can start a
monthly SIP of Rs2000 and then instruct the mutual fund house to increase it by
Rs500 every six months.
This is a good
option for investors who expect their income to increase through salary hikes,
bonuses, or other sources of cash flow. You can also consult your mutual funds investment advisor to determine the top-up amount.
4. Perpetual SIP
Usually, most SIPs
have a fixed tenure – there is a maturity date. However, there is no such end
date in a perpetual SIP. You can remain invested as long as you want.
The perpetual SIP
will discontinue only after you submit a request to stop it.
5. Trigger SIP
Trigger SIP allows
you to modify your SIP as and when market conditions get favourable or
volatile. You can trigger the SIP investment by starting a new SIP, redeeming
existing units, or switching to another plan.
Trigger SIP is
recommended only for experienced investors who have an in-depth understanding
of market dynamics. These investors rely heavily on the SIP return calculator to take premeditated risks.
If you are looking
for professional advice on SIP investment, Ajmera x-change can help you. We are
a SEBI-registered company in India offering a diverse portfolio of financial
services and products, including mutual funds. Our easy-to-use online SIP investment calculator is a powerful tool to figure out
the amount of investment and expected returns. Our in-house mutual fund
advisors have expertise in analysing different SIP schemes and choosing the
right one for you.
Get in touch to know