What is Systematic Investment Plan (SIP)?

Systematic Investment Plan or SIPs are modes of investment in a mutual fund scheme, where in you can purchase mutual fund units of the fixed price in regular intervals.This fixed amount gets deducted from your bank account at regular periods, which you decide before hand.

It’s the best way of starting investing in equity market, and is one of the smart and easiest ways as well.

Further, with mutual fund SIPs, you can choose to pause or stop the systematic investment plan (SIP) whenever and wherever you feel the need to do so. Hence, Mutual Fund SIPs are flexible in nature.

Why Systematic Investment Plan (SIP)?

Mutual Fund SIP offers the benefit of compounding

Interest on your investment over time gets compounded with time and what you receive when you redeem is your invested amount + accumulated interest.

Consider this:

If you invest 5000 monthly for the period of 30 years, your systematic investment plan (SIP) amount will grow to Rs. 1,76,49,569, against your investment of just Rs. 1800000.  Hence your investment is roughly equal to 9.8 times your investment amount.

Consider the following variables:

With Retirement Calculator, you can calculate your own retirement amount depending upon your age and current expenses.

This calculator will also show you if there is any shortfall in the investments, if yes then how much more you should invest, in order to live a stress free life after retirement.

Investment for child’s education

Your child’s education is perhaps the next goal in the priority list.

If you start early, you can be mentally prepared for the expenses incurred.

With Education Calculator, you can calculate how would you need to invest for your chids education.

For example, consider the following:

Similarly you can calculate your corpus and/ or the corpus required for marriage.

Knowing the Performance of Your Systematic Investment Plan (SIP)

Knowing how your SIP has been performing or has performed is as necessary as investment in the same.

Also, if you are about to invest and start the Sip, you should know how your shortlisted funds have performed in the past ten years. You can visit systematic investment plan (SIP) performance page, for the same.

SIPs are Investor Friendly

Your SIPs have a flexible nature. Depending upon your needs and convenience, you can pause, stop, redeem and invest more as Top Up.

SIPs can be Topped-Up

You can increase your systematic investment plan (SIP) amount by a fix percentage or a fix amount with respect to your income. This leads to generate more wealth in the long run.

Investment without top up

If you invest Rs. 1,000 for 30 years, your total invested amount will be Rs. 3.60 lakh, while the return will be of Rs. 27.31 lakh.

Investment with Top Up

If you invest Rs. 1,000 for 30 years with an annual top up of 10%, your total invested amount will be Rs. 19.73 lakh, while the return will be of Rs. 27.31 lakhs.

SIPs are Flexible

You can increase or decrease SIP Amount, depending upon your financial scenario. Also, you can choose to pause or resume the SIPs.

Hence, it’s easy to punch an SIP, and it’s easy to apply as well. You can contact your advisor as in where to invest and how much to invest, depending upon your goals.

Benefits of SIP in Mutual Funds

SIPs are indeed the best bet when it comes to investing and preparing for your future goals. With SIPs you can invest in a disciplined way. However, make sure to not to get affected by the market lows. Also, depending upon the amount required for goal, you can choose to increase/ decrease/ or choose the top up option. To know more, read Why one should do SIP Investment?

Best Mutual Fund SIP Plans

How to choose the SIP?

Choice of SIP majorly depends upon the timeline you have for the goal completion, your risk profile and your current financial situation. Once you have a note of all of the above, you then choose funds- be it debt or equity mutual fund and start the SIP with the required amount.

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