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7 Misconceptions About Online SIP Investment

This presentation gives an investor a clear overview about the 7 misconceptions about online SIP investment. Read these 7 misconceptions and plan your investment through online sip in mutual funds at MySIPonline.

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7 Misconceptions About Online SIP Investment

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  1. Systematic Investment Plan 7 Misconceptions About Online SIP Investment

  2. What Is Systematic Investment Plan? • SIP or Systematic Investment Plan is a mode of investment through which an investor can invest small amount periodically in the mutual funds. • Online SIP investment scores a point over the Lump Sum investment on the grounds of rupee-cost averaging and compounding. • Through this mode of investment, an investor becomes free from the burden of timing the market. Flexibility and affordability are the other perks that comes handy with this mode of investment. • However, there are still some misconceptions regarding the SIP investment which are busted in the upcomming slides.

  3. Myth 1: Only Small Investors Take the SIP Route • Investors generally believe that SIP investment is a good pick for the small investors only which is a partially true. • Remember, there is a minimum SIP amount for every mutual fund scheme but no maximum limit. • Usually, the minimum amount required is Rs. 500 but an investor can invest as much money as he desires. • Thus, small investors can invest with a minimum of Rs. 500 but that doesn't means that large investors cannot deploy huge cash through SIP. • Moreover, SIP assists in developing savings habit.

  4. Myth 2: Don't Start an SIP When Market Is High • Generally, investors think that starting an SIP is a bad idea when the valuations are high as they would accumulate lesser number of units at low NAV's. • It is again a false belief as SIP eradicates the stress of market timing. • When the market is high no doubt, the fund managers will buy lesser units at higher NAV's but when the market will follow a bearish trend more units will be purchased by the fund managers. • Thus, an investor enjoy the benefits of rupee-cost averaging. • Remember, it is not about the 'right time' but for 'how much time'.

  5. Myth 3: SIP Is a Long Term Investment • Another misconception about SIP is that it is a long term investment which is again partially true. • The investment tenure in SIP depends upon your financial goal. • If you have a short term goal then you can stay invested for a shorter period of time as well. • However, SIP yields good returns in the long term. • Power of compounding is a powerful advantage of SIP which offers good results in the long term. Thus, it is advisable that an investor should stay invested for a longer period of time.

  6. Myth 4: SIP Provides Guaranteed Returns • There is no place for the word 'GUARANTEE' in the mutual fund market. • By an SIP plan, an investor enjoys several benefits like, rupee-cost averaging, compounding, etc., but that doesn't mean that systematic investment plan will offer guaranteed returns. • It depends on the right calls made by an investor in the market conditions. • However, in case of a loss, the impact will be lower than the Lump Sum investment.

  7. Myth 5: Lump Sum Investment Is Not Allowed in SIP Fund • Investors have a misbelief that a Lump Sum investment is not possible in the mutual fund in which he is investing through SIP. • In case of a sudden cash flow, you can do the lump sum investment in the SIP fund and vice-versa. • Thus, an investor can do the lump sum and SIP investment in the same mutual fund.

  8. Myth 6: An Investor Receives Entire Money from an ELSS Fund after 3 Years • ELSS or Equity Linked Savings Scheme comes with a lock-in period of 3 years. Investors think that the entire money can be withdrawn from the fund after the completion of 3 years but the reality lies far away from their expectations. • In ELSS funds, each SIP investment is seen as a separate investment and every installment has to complete a lock-in period of 3 years. • Thus, each investment should complete an investment tenure of 3 years before you can withdraw the installment amount.

  9. Myth 7: High Penalty Is Imposed for Missing an SIP Date • The asset management company do not charge a penalty on missing of an SIP date. However, you can check the charges deduct by your bank. • Suppose, you start a monthly SIP of Rs. 500 in a mutual fund. Let, the fund managers buys 5 units having a NAV of Rs. 100. Now the month in which you have missed your SIP, you will be restricted from buying the units due to insufficiency of the amount. • Therefore, it is always recommended to have enough cash in you bank balance so that the SIP installment can be auto-debited from your bank balance.

  10. Conclusion SIP mode of investment is a disciplined approach of investing in mutual funds that brings along with it several benefits compared to the Lump Sum investment. However, there are several myths regarding the online SIP investment among the investors. The presentation is crafted in a manner to bust the myths. Knowing the truth, you must have learned that SIP investment is the best mutual fund investment option. Happy Investment!

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