What is SIP Plan? More information about SIP Plans.
I got some enquiry mails from my readers regarding SIP Plans. So I thought let me give a brief regarding SIP Plans in my next post.
“Systematic Investment Plans” are called as SIP Plans. This type of investments is similar to investing in a recurring deposit or a post office savings where you deposit a small amount of money every month.
You should invest a minimum amount of Rs 500 every month in most of the mutual fund schemes. But some mutual funds like reliance Mutual funds, SBI Chotta SIP Scheme has a minimum amount of Rs 100 per month. This is targeted to attract more retail investors.
Benefits of SIP plans: Start Investing Any Time:As you are going to make monthly payments, there is no need to track the markets more perfectly. Even if you invest this month in a high NAV, then also there are no issues. You can invest next month in a less price and average the high NAV.
The Average Cost would be less:As you would be buying more units at a relatively cheaper cost, the average cost of the units would go down more significantly. The cost bought by an investor for a period of 12 month (say), would be lower than the average NAV of the original scheme for the particular period. This is called as Rupee Cost Averaging.
Achieve your savings target:As you would be saving small amount every month, you could reach the financial target set by you for your family commitments like children’s education, child’s marriage etc.
How to Invest?Most of the mutual fund schemes have systematic investment options for their schemes. While investing, you should opt for SIP plans. Then you can fix whether you want to go for monthly payments or quarterly payments or half yearly payments. Then you should also declare the amount you are planning to invest.
You can either give post dated cheques or you can make the monthly payments through Electronic Clearing system. If you opt for ECS method of payment, then you should give a cancelled cheque along with duly signed ECS authorization form. Once this form is submitted along with the mutual fund application form, then the bank will authorize the ECS payments.
Some of the diversified plans that would be recommended for investing through SIP are:- Birla Sunlife Frontline Equity Fund
- Reliance Diversified power sector fund
- Fidelity India Equity Fund
Disclaimer:
“Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved. Please read the Statement of Additional Information and Scheme Information Document carefully before investing”.
“In Mutual Funds, the past performance is not guaranteed in future”.
The information contained in this website has been obtained from sources considered to be authentic and reliable. However, InvestMutualfunds.net is not responsible for any error or inaccuracy or for any losses suffered on account of information.
