5 things to know about Systematic Investment Plan

India Infoline News Service | Mumbai | August 13, 2017 01:05 IST

SIP or Systematic Investment Planning is a method through which you can invest in mutual funds through small and periodic installments.

SIP or Systematic Investment Planning is a method through which you can invest in mutual funds through small and periodic installments. SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly and quarterly).

A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future.

1. Starting a SIP

In an open-ended mutual fund scheme, you can start a SIP any time you want. Just fill up the application form along with an SIP mandate and submit it to the point of acceptance. It generally takes 10-30 days for the bank to register your SIP mandate and start it.



2. Duration of a SIP

Most fund houses stipulate a minimum of six months for a SIP. Investors can choose any tenure they wish or they may even opt for the “perpetual option” which means the SIP will continue till the investor gives an instruction to the fund house to close it.

3. Flexibility of the SIP amount

An investor can increase or reduce his SIP amount, by cancelling the existing mandate and giving the revised one. Fund houses do not charge any penalty for stopping the SIPs.

4. Adding lump sum amounts to SIP

Yes, of course, you can add a lump sum amount to the same scheme in which you are running a SIP. It does not affect the SIP. 

5. SIP tenor should be lesser than your goal horizon

Your overall SIP return will be affected if the market falls significantly in the last year of your SIP tenor, hence, it is advisable that the investment horizon for SIP be lesser than your goal horizon.

Disclaimer: The contents herein is specifically prepared by ‘Dalal Street Investment Journal’, and is for your information & personal consumption only. India Infoline Limited or Dalal Street Investment Journal do not guarantee the accuracy, correctness, completeness or reliability of information contained herein and shall not be held responsible.

 

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