Systematic Investment Plan (SIP) to grow money
Systematic Investment Plan (SIP) has emerged to be the most popular scheme of Mutual Funds among the middle-class investors in India. SIP is a mode of financial investment much like a recurring deposit in banks. But the difference is that banks provide you a limited percentage of interest in your capital whereas the return of SIP depends on the present market scenario. Like recurring deposits in banks, you invest a particular amount at a regular interval. But unlike bank deposits, you bear the possibility of loss and a chance of higher return when you invest in a SIP of a mutual fund. Some SIP in mutual funds fall under the ELSS category; hence you save tax too with such investments. There are so many SIPs across the Indian market, so it is not easy to find out the best SIP to invest in. You need to check the details of the SIP, the reputation of the company, the scheme where they invest, and the record of the past few years.
You need to choose a particular plan of SIP of a mutual fund. The amount will be deducted from your bank account at a regular interval. You will be provided the units of the mutual fund as per their Net Asset Value (NAV). According to the present market value, units are added to your account after each installment is paid from your side.
Why invest in SIP
SIP is a goal-based investment that makes you a disciplined investor in order to fulfill your future goals. A systematic investment plan enables an investor to invest directly in the stocks, bonds, debts, and equities of big companies with a minimum amount at regular intervals. So, the chance of a big return is quite high and you bear a minimum risk factor. SIPs in Mutual Funds are managed by financial experts; hence you get the best out of the market. You can invest online judging the schemes of all existing plans in the market. Hence, it is a hassle-free way of investment for the next generation investors. As you can invest online in SIP, you almost don’t have to pay commission to any middle man. Hence you get the maximum benefit of your investment. There are so many schemes in SIP to make it a more investor-friendly scheme in the market. You can set the tenure of your investment and the amount as per your goal. SIP plans are flexible in nature. You can add an additional amount to your installment through the scheme of top-up SIP. A flexible SIP scheme helps you to increase or decrease your installment as per your status of income and financial goal. Through the perpetual scheme of SIP, you can withdraw your money whenever you need it. SIPs under ELSS scheme helps you to get tax benefit under 80c act of Indian Income Tax. But such SIPs have a minimum lockin period of three years.
How to choose the right SIP?
Choosing the correct SIP is a matter of concern when you want to get a handsome return and fulfill your financial goals through mutual fund investments. The first thing is to find out a plan that suits your financial goal and eligibility. You set your term (long/short/medium), amount to invest monthly, and calculate adding the compound interest to see if this meets your financial goal. Have a sincere study on the existing markets and the return they made in the last five years. Find out the mutual fund that provided the best SIP in terms of average return over the years in the particular scheme that you are thinking of. The best way of an SIP nowadays is that you can invest online according to your investment goal and risk appetite. You may consult an AMFI registered mutual fund distributor to choose the best SIP for your investment portfolio.
