Systematic Investment Plan (SIP) is a way to invest in mutual funds for a long term. Investing through this is quite easy. There are different types of SIPs in which you can choose to invest. SIP allows investors to invest a fixed amount at predetermined intervals. Let us discuss its types here, so that investing becomes easier for you.
Regular SIP
A regular SIP is the simplest form of a systematic investment plan. In this, you have to put money at regular intervals. You can choose the option of monthly, bi-monthly, quarterly or half-yearly. The contribution made by you is then invested in the mutual fund of your choice. When you open this SIP online, you are given the option to choose the period, contribution amount and frequency. Yes, once you choose the fixed amount, you cannot change it later.
Flexible SIP
A flexible systematic investment plan known as a flexi SIP is just like a regular SIP. According to Motilal Oswal, however, the only difference between the two is the investment amount. In a flexi scheme, you can adjust or change the amount you wish to invest at any time. By allowing you to change the investment amount, flexi SIPs give you more control over your investments than a regular plan.
Top-up SIP
Top-up SIPs are also known as step-up SIPs. Such systematic investment plans allow you to increase your contribution at certain predetermined intervals. For example, you can start by investing Rs 5,000 every month and instruct the fund house to increase the contribution amount by Rs 1,000 every six months till the end of the tenure. For the first six months of the SIP, you will contribute Rs 5,000 every month and for the next six months, you will contribute Rs 6,000 every month. This continues till the end of the SIP tenure.
Trigger SIP
Trigger SIP invests in mutual funds online only when a specified event occurs. This specified event can be anything from favorable market movements, index levels or even NAV levels. For example, you can set up a trigger SIP to start investing only when the NAV level of the mutual fund drops below a particular level. The advice here is that you should choose such a scheme only when you have gained sufficient knowledge and expertise about the stock market.
Continuous SIP
There is no fixed period for Continuous SIP. The investment plan continues as long as the person keeps investing at regular intervals. It stops only when the investor gives a stop instruction to the fund house. Also, there is not much difference between Continuous SIP and regular plan.
Latest Business News