A Systematic Investment Plan (SIP) is nothing but a wealth creation tool that allows investors to invest a certain predetermined amount on a regular basis in a mutual fund scheme. SIP Investment Plans in India are one of the best ways of entering the equity market. Also, it helps to achieve financial goals by investing a small amount of money on a pre-set date of every month that eventually leads to accumulating the required corpus for reaching the set financial goal. Here are the various types of SIP plans in India: Top-Up SIP plans allow the investors to enhance the SIP amount at regular intervals. This provides an advantage to make the most out of your SIP investment
by increasing your contributions towards those schemes that are performing well in the market. Moreover, by increasing investment amount at regular intervals, you can accumulate a huge corpus to achieve your financial goals. As the name suggest, flexible SIP gives you the option of changing the investment amount as per your cash flow. So, if in case you face any type of cash crunch due to any reason, then you can skip paying a few installments until your financial situation normalizes. Similarly, if you’ve received a bonus or made some gains, you can increase your SIP amount accordingly. While investing in the flexible SIP plan, you will have to stipulate a fixed amount of investments. The plan provides an option to change the investment amount of that month 7 days prior to your SIP date.
This type of SIP is beneficial for the ones who have sound knowledge and awareness of the financial market. Under this type of SIP, you can set target based on pre-specified date, price, NAV and index level. However, it is advised not to opt for the trigger SIP as it encourages speculation. It is always better to choose a long-term tenure in order to foster your financial goals. These types of SIPs are the ones without a tenure end date. Fund houses mostly assume such SIPs to continue for ‘n’ number of years, unless you give a written communication to stop them. Perpetual SIPs helps to ensure continuity of investment. This makes it beneficial especially for the ones who are too busy and don’t have time to renew their SIPs. It is always advised to start SIP for a fixed period of time instead of leaving the end date blank, because SIPs help foster goal- based approach. Hence, these different types of SIP schemes in India can help you to make a smart and disciplined investment choice in order to achieve your long-term and short- term financial goals.