Types of SIP (Systematic Investment Plan): Every expert advises investors to do SIP. With its help any investor can create a big fund in the long run. While doing SIP, we should have complete information about it, which will help in getting better returns. Today in this article we are going to explain in detail about the types of SIP.
What is SIP (Systematic Investment Plan)?
Investors choose a fixed amount to invest regularly in a mutual fund of their choice. The money is deducted from their bank account and invested in the chosen mutual fund scheme at the prevailing Net Asset Value (NAV).
How does SIP work?
SIP stands for Systematic Investment Plan. It is an investment strategy that allows the investor to invest a fixed amount on a regular monthly or quarterly basis in a mutual fund scheme.
What are the types of SIP?
There are total seven types of SIP. With its help, you deposit money in installments every month. This gives maximum benefit of compounding.
1. Flexible SIP
Flexible SIP is also a good way to invest. In this you increase and decrease your SIP according to the market conditions. To do this type of SIP, you need to have market knowledge.
2. Regular SIP
Only a fixed amount is invested in regular SIP. You can choose the option of monthly, quarterly or annual SIP. This is the simplest way to do ASP.
3. Permanent SIP
Trigger SIP is also a way to do SIP. Invest in this by making additional investments in your SIP when any special situation arises in the market. Most people do this type of SIP to make lump sum investments.
4. Trigger SIP
In this type of SIP you never make a fixed choice. You can turn it off anytime. It is considered quite convenient and a larger fund can be accumulated through this type of SIP.
5. Top-UP SIP
If you are doing SIP to meet your financial goals then do not forget to take SIP insurance. This is a group term insurance. This AMC varies according to the companies and in this, a maximum amount of Rs 50 lakh is received by the nominee on the death of the person doing the SIP.
6. SIP Insurance
Whenever you invest additional amount in your existing SIP, it is called Top-up SIP. For example, if you do a SIP of Rs 1000 every month and as your income increases, you increase the amount of this SIP to Rs 1200, then it will be considered as top-up SIP.
7. Valuation-based Trigger SIP
This trigger is also similar to SIP. In this, SIP is done when the market valuation is low. For example, if the valuation of Nifty and Sensex falls below a level, then the investor decides to invest.
Yes, anyone with a valid PAN card and a bank account can invest in SIP.
Yes, you can increase or decrease the SIP amount, stop the SIP, or even restart it, based on your financial goals and circumstances.
The minimum investment amount can vary among mutual funds but is generally low, often starting at Rs 500 per month.
Yes, investors can choose the frequency of their SIP investments, such as monthly, quarterly, or semi-annually.
The Net Asset Value (NAV) in SIP is calculated based on the market value of the mutual fund’s holdings. Investors get units in proportion to their invested amount at the prevailing NAV.
No, SIP involves regular and periodic investments over an extended period, providing the benefit of rupee cost averaging.
No, SIP returns are subject to market fluctuations. They depend on the performance of the underlying securities in the mutual fund portfolio.