SIP Mutual Funds: What is SIP? | Best SIP Investment Plans, Benefits
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SIP Mutual Funds: What is SIP? Best SIP Investment Plans, Benefits |
Table of Content:
- SIP Mutual Funds: What is SIP?
- Best SIP Investment Plans, Benefits,
- Why invest through SIP?
- Power of Compounding,
- Become a disciplined investor,
- SIP or One-time : How should I Invest?,
- Monthly SIP,
- How to Choose a SIP?
- Duration of SIP,
- How To Invest in SIP?,
- FAQs (Frequently asked Questions),
- Why Choose Systematic Investment Plan?,
- When is the best time to invest in SIP?,
- Should I Choose SIP for Long term wealth?,
- How much should I invest in a mutual fund through SIP?,
- Can I miss an SIP payment?,
- Are all investments through SIP have tax benefits?,
- Is SIP safe?,
- How do I start my SIP investment?,
- How do I start my SIP investment?,
- How can I extend my SIP duration?
What is SIP?
Systematic Investment Plan, commonly referred to as SIP, allows you to regularly invest a certain amount in your preferred mutual fund scheme / s. In SIP, a certain amount is deducted from your savings account every month and directed towards the mutual fund you have chosen to invest.Why invest through SIP?
The concept of SIP focuses on the philosophy of "Save First, Spend Next".
With SIP, you can invest small amount at fixed intervals (weekly, monthly or quarterly) instead of making a lump sum investment.
Power of Compounding
The basic principle of compound interest implies that small amounts invested over a long period will have larger returns than a one-time investment.
Become a disciplined investor
A SIP investment will make you more disciplined in matters of managing your finances. With the option of automatic payments, this means that you will not have to remember every month.
Start with just Rs 500
You can invest in mutual fundstrap as a SIP amount of at least 500 rupees and still do not feel burdened by your budget plan. Generally, you can increase your monthly installments by 15% over a period of time.Rupee Cost Averaging
The equity market is volatile in nature and when you make a SIP investment, you will be buying more units during a recession and a blooming market will have fewer number of units and as a result you will reduce the cost per unit.Acts as an Emergency Fund
One-click withdrawal SIP can act as an emergency fund for potential contingencies (such as a medical crisis or job loss), which eases your mind.SIP or One-time : How should I Invest?
Often first time investors get confused choosing between an SIP investment or one-time investment.
Monthly SIP
On the other hand, in a SIP, a fixed amount is deposited in a mutual fund scheme at regular intervals of time. In short, a one-time investment mode can be chosen if you currently have money in hand that can be invested and a SIP can be chosen if you are expecting regular inflow of money in the future.One-time investment
In this mode, you pay a considerable amount of money once.How to Choose a SIP?
The Internet will provide you with the A-Z of shortlisted mutual funds including your past returns.
However, please ensure that the fund you select meets the criteria below.
₹500 Crore Asset Under Management
500 crore asset size can be a reasonable benchmark when selecting a fund. This does not mean that the funds under this corpus are bad, but it is not fair.Duration of SIP
The duration of SIP mutual funds is an important factor in terms of risk, return and tax. Keep a 5-year reference point and check how the fund has performed in the markets.Fund House
The reputation of the SIP fund house is an important factor when choosing a scheme, as it reveals how much they were able to handle market heights and lows without making their investors feel the impact.How To Invest in SIP?
Set Investment GoalsEach mutual fund has a specific goal and purpose. You have to choose one to suit your needs. Tell us your financial goals and income statements and we will create plans for you.
Choose
Make an informed decision based on your individual needs and choose a systematic investment plan mutual fund that you want to invest. You can also delegate this task to the ClearTax team.KYC
All our mutual fund investments mandate KYC documents and NetBanking accounts. We provide e-KYC option to upload all documents online from your home or office comfortably. There is usually no need to sign the check and fill the form.FAQs (Frequently asked Questions)
As a tax-paying citizen, Section 80C of the Indian Tax Act gives you some relief -
Deductions from your total annual income up to 150,000.
Why Choose Systematic Investment Plan?
If you are short on cash to invest outright or if you want to reduce your risks then you can opt for SIP. In addition, a SIP will bring you into the discipline, which helps you make logical decisions instead of moving ahead of greedy impulses.When is the best time to invest in SIP?
There is nothing like a good timing when it comes to investment. It is more about what you need from that investment. In a SIP, you can automate your transfers, and be hassle-free about the date in a particular month.
Should I Choose SIP for Long term wealth?
Any investment period can be chosen by the customer. However, it has been proved that long-term investment has been rewarded with higher returns than short-term investment.
How much should I invest in a mutual fund through SIP?
In a SIP investment you can start with less than Rs 500 as your investment and you can go to whatever extent you want.
Can I miss an SIP payment?
Yes, you can miss your payment and still your account wouldn’t be deactivated. There are options to pause your payments in various mutual funds.Are all investments through SIP have tax benefits?
Only investments in ELSS through SIP have tax exemption up to Rs. 1.5 lakh PA under Section 80C.Is SIP safe?
A SIP is a method of investment. The safe / risky component is related to the investment you choose.
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