7 Types of Systematic Investment Plans

Types of Systematic Investment Plans

Do you dream of growing your money exponentially and are you thinking of investing in Mutual Funds? Then you should know about the Systematic Investment Plans. It’s a fantastic tool for great investment potential to grow your money at a faster and more stable rate while being a disciplined and smart investor. So, how do you invest in Mutual Fund SIP, and what types of SIP you should invest in? Read it fully and become a smart investor today with Wealthcare.

What is SIP (Systematic Investment Plan)?

The basic question before going deeper and discussing the type of SIP is, what exactly is a SIP? SIP stands for Systematic Investment Plan. It’s a mode of investment where you invest a fixed amount in regular intervals either quarterly or monthly depending upon your needs for a longer period. Through investing for a longer term you can enjoy the returns under rupee cost averaging and long-term investments.

Now, Systematic Investment Plans are of different types and kinds and which one is right for your investment strategy? Let’s Discuss that.

Types of Mutual Fund SIP

Investors can become very disciplined investors when they start investing in SIP, as you have to invest either quarterly or monthly depending on the SIPs. Further, SIP can give back great returns in the end, if you invest in it for the long term.

SIP Mutual Funds are of 7 types:
1.Regular SIP
2.Top-up SIP
3.Flexible SIP
4.Perpetual SIP
5.Trigger SIP
6.SIP with Insurance
7.Multi SIP

1. Regular SIP

These are the simplest form of investment options in SIP. Under this SIP, the investor invests a fixed amount for either monthly, quarterly, bi-monthly, or half-yearly. There are weekly or daily SIPs available in regular SIPs too. We don’t recommend investing in these systematic investment plans. When you choose the SIP, you have to choose the investment duration, amount, and frequency of that duration. In the regular SIP, you have no option to change the investment amount in the whole tenure of the SIP.

2. Top-up SIP

Called by another name Step-up SIP, the Top SIP helps investors which they can increase their investment in a gradual periodic way. Wealthcare has a provision for investment in Top-up SIPs. This helps the investors to invest large amounts for later. For instance, if the investor wants to invest more into the Mutual Fund SIP then you have the option to increase the amount as you want. This can help in the full corpus amount leading to better investment under the power of compounding. Therefore, it’s a great option if you can invest in Step-up or Top-up SIPs.

Further, in Step-up SIP you can increase the amount of SIP from Rs. 500 or multiples of it. For example, if a SIP Mutual Fund is of the amount of Rs. 10,000 and the investor decides to increase the amount by Rs. 1000, this can further change the total amount of investment from 10000 to INR 11,000. This can help the investor to retain the corpus for investment sooner. This can be more helpful to reduce the inflation on maturity value.

3. Flexible SIPs

The name says everything here. The Flexible SIPs can help you change the SIP amount accordingly. The flexible SIPs are also called Flex SIP or simply Flexi SIP. You just have to give intimation to the fund house with all the required changes in SIP contributions. But remember, you have to give proper intimation a minimum of a week ago to let the changes being done into your SIP. Investors can decide the investment amount based on their financial conditions or the conditions of the market.

This can help the investor to change the amount and intimating the fund house on a prior period. For instance, if the investor is facing a cash crunch, they can reduce the SIP payments within a time frame. This can help the investor to not go into the default zone. Also, if the investor wants to increase their SIP amount, they can for a fixed or certain time frame. The Flexi SIP can help the investor adjust their amount based on their preferences.

4. Perpetual SIP

This is important. When applying for a SIP, a form needs to be filled out. In that application form for SIP, the investor needs to select the SIP tenure. If you don’t select the tenure option, the SIP moves from one form to perpetual SIP where there is no time duration of SIP. It simply means that the SIP will go on until there are instructions from the investor to continue the SIP or on the other side the fund manager decides to stop the SIP.

Also, if you don’t want to do SIP under a certain tenure and don’t want limitations on maturity value through their SIP amount, now they have the option to opt for Perpetual SIP. This gives a true hold on the market as the investor can invest for a much longer time and gauge the market. Whenever the investor wants, they can just redeem the amount.

5. Trigger SIP

These Mutual Fund SIP are for investors who are well aware of the risks of the market and can invest under market volatility. In this SIP, the investor should be ready to sell or buy the propositions under market volatility. In the Trigger SIP, investors have three options. They can set the SIP end date or switch the date of the SIP or redeem the amount. This trigger can be related to any possible event. For instance, it can be a favorable event in the market, or NAV or index level of capital appreciation, or the fund or it can be a depreciation scenario. It’s important to understand that trigger SIP can only be done by experienced investors because of its speculative nature. Also, one needs to have great knowledge and understanding of the market to invest in Trigger SIP.

6. SIP along with Insurance

If any investor is opting for long-term systematic investment plans then some asset management companies do provide an insurance cover. It can be categorized as ten times the amount of SIP. Also, it increases gradually over time. But, this feature is provided only with equity mutual funds. Also, note that the feature of term insurance is kind of an add-on over the SIP mutual Fund and does not affect the SIP in any way possible.

7. Multi SIP

If you want diversity in your funds being invested, then you can opt for Multi SIP. The Multi Systematic Investment Plan invests the money in multiple fund plans and helps in the diversification of the funds. Investors just have to fill up a single form for Multi SIP and be done.

Which Type of SIP is Best to Invest with Example?

This depends on the type of investor you are. For different people with different needs, different Mutual Fund SIPs will work. If you have a regular income source you can choose the Regular SIP or choose a Step-up SIP if you want bigger returns that are increasing with time. Choose a Perpetual SIP that can continue for the infinite time you want. Or choose a Flexi SIP Mutual Fund if you uneven income structure. Although SIP along with insurance is a great option, there are very few SIP funds that do that.

You can opt for Multi SIP if the investment returns are exceptionally great from this type of SIP.

Take an investor who wants to generate a corpus of amount Rs. 25 Lakhs in the period of 10 yrs. He has options of regular or Step- Up SIP. Assuming, he adds an extra 10% in SIP each year.

Regular SIP
Investment Amount: INR 5,000 each month
Tenure: 120 Months/10 months
Total Investment value: 6 Lakhs
Return Percentage: 12% PA
Expected maturity amount: INR 11,61,695
Returns: INR 5,61,695

Step-up SIP
Investment Amount: INR 5,000 each month
Tenure: 120 Months/10 months
Total Investment value: INR 9,56,148
Return Percentage: 12% PA
Expected maturity amount: INR 16,87,163
Returns: INR 7,31,015

If the investor invests in Step-up SIP and increases the amount gradually, the investor will get a greater maturity value. If the same amount is looked at, the Step-Up SIP will give that return in just 8 years rather than 10 years in Regular SIP. The Step-up SIP will also provide greater returns and help in fighting the effects of inflation too.

What Type of SIP Should You Select and How?

Investors should understand their needs and financial backing and then invest in the type of Mutual Funds they want:
Regular SIP – If the investment is gradual and the same with zero pauses or no top-ups.
Step-up SIP – If the investment will gradually increase. It will provide higher maturity in less time.
Perpetual SIP – An SIP going till infinite time until stopped. Investors who have regular incomes can do that.
Flexi SIP – If the investment plans are irregular. People with irregular income can start Flexi SIP.
Trigger SIP – These SIP are only for investors with great knowledge and expertise in the market.
Multi SIP – Only choose this SIP Mutual Fund, if the fund house is providing great returns.


These are the 7 different types of Systematic Investment Plans that you can invest in. Invest wisely and take help from Wealthcare to invest wisely.

CA Mukesh Gupta
CA Mukesh Gupta
Mukesh Gupta is the founder and director of Wealthcare. He is Fellow chartered accountant, Certified Financial Planner and Certified Public Financial advisor. He is in financial services industry since 1994. He conducts free money management sessions for corporates and associations on topics related to Personal finance. His previous engagement was with Birla Sunlife group. He regularly writes on topics related to Personal finance and occasionally appear on electronic media.

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