SIP is basically a regular investment plan which offers long-term benefits to investors. The multiplication of wealth for the investors has increased its popularity leading to massive growth in its user base. Web pages focusing on the SIP calculator are generating exponential traffic in recent times.
In India itself, the number of SIP accounts in January 2019 stood at 2.57 crore with the amount collected to the tune of 8064 crores. Thinking where did you miss and what are the ways you too can invest in this segment? Well, read on to know more.
How does SIP work?
“Little drops of water make the mighty ocean”
Sounds familiar right? Systematic Investment Plans follow the exact same procedure to multiply your wealth. As an investor, you can set a monthly amount in which you will be investing in mutual funds through the invest SIP route providing you with a huge corpus during the completion of tenure. Investors also need to know that unlike PPF (Public Provident Fund) and Insurance schemes,
SIPs are flexible and you can withdraw the amount whenever you feel like. The power of compounding and rupee-cost averaging methods will make you richer by a million times if you have patience and information about the market swings. Continue reading this article to know the different SIP options where you can put your money on.
Types of SIP
If you are a new investor with minimum knowledge, this is the option for you. Simply put, top-up SIPs are investment plans where you can increase or decrease the monthly amount on predetermined intervals. The minimum SIP top-up is 500 and its multiples which is affordable for medium risk investors. Go for it, if you are looking to play safe and build huge wealth without much risk involved.
In perpetual SIP investors will be allowed to keep paying SIPs without any end date. You can go on as long as you wish 3 years, 5 years or 20 years no issue. If you are a newbie looking to start your financial investment portfolio, this is the best option for you. Whenever you want to stop the investment, just fill a closure form and withdraw the entire amount. However, analysts suggest that without a time-frame it is difficult to set a financial goal for you. The choice is yours.
For those who have strong knowledge about SIPs, this one is for you. Here you will be setting a NAV or index level or a special date to start your payments. The significance of the trigger is that any form of appreciation or depreciation of the funds will result in a sudden upswing or downswing of the market.
Basically, NAV/Depreciation trigger will allow withdrawing money or exiting the market if there is a bearish run. Index level appreciation trigger will allow the investor to set a benchmark in Sensex in multiples of 100 and on reaching that might switch to other schemes. Also, capital appreciation trigger will allow choosing monetary basis points the time after which you might opt-out. Make no mistake this is about investors who have thorough knowledge about the industry.
This is also for investors with the market knowledge and an intention to take risks. Flexible SIPs are linked to a key ratio. The risk is once the market goes down below the ratio, the investments increase by itself. The amount of money deducted from your bank accounts will vary leading to an uncertain situation. So yes, this is not for beginners.
These are the best SIP planner options that can bring a huge amount of wealth in your hands. With a higher inflation rate and reducing interest rates in fixed deposits, its time that you reform your financial portfolio into a more matured segment. Equity is always better than debt and focuses on long-term SIP investments for a better return.