A SIP (systematic investment plan) is a convenient and a disciplined way for investors to invest in mutual fund schemes in fixed installment over fixed time intervals like weekly, monthly, quarterly, etc.
Following are some of the Systematic Investment Plans (SIP) that may potentially boost your returns in the long run:
Smart SIP: This option differs from a regular SIP, because it invests in equity funds when the markets are fairly valued. On the other hand, in an undervalued market, your monthly SIP amount is automatically doubled.
Trigger SIP: This type of SIP allows you to mitigate market volatility to an extent since you can switch between equity and debt fund schemes with relative ease, (if within the same mutual fund).
Top-up SIP: This option allows you to increase the monthly investment amount periodically, either as a percentage or a fixed amount each year. A Top-up SIP is a good choice when you have surplus funds to invest.
Perpetual SIP: Typically, a SIP investment specifies an end date to the investment. When you avail of a Perpetual SIP, however, there is no end date predefined in the mandate. A word of caution: when you opt for a Perpetual SIP, do ensure you monitor your investment on a periodic basis to ensure a long-term gain.
Flexible SIP: If you’re looking at investing a varied amount each month, this is the option for you. A Flexible SIP allows you more control over your investment, by either increasing or decreasing the amount you choose to invest, depending on your cash flow.
While there can be no guarantee of returns, investing systematically:
Helps instill discipline - you put a certain sum of money aside periodically
Brings convenience – it automates the process of investing through a one-time registration
Is affordable – you can invest small, calculated amounts in Mutual Funds
Rather than focusing on earning the highest returns, you should consider starting early so that your investments get more time to grow. You can even do so by investing a periodic calculated amount towards a defined goal.
Mutual fund investments are subject to market risks, read all scheme related documents carefully.