What is systematic investment plan?

A Systematic Investment Plan (SIP), more popularly known as SIP, is a facility offered by mutual funds to the investors to invest in a disciplined manner. SIP facility allows an investor to invest a fixed amount of money at pre-defined intervals in the selected mutual fund scheme.

What are the types of systematic investment plan?

A regular SIP allows investors to invest in an SIP regularly without a pause or top-up. A step-up SIP will increase the investment amount of SIP every year. Perpetual SIP is a SIP till eternity. Investors with regular income can invest in all these SIPs.

What are the benefits of SIP?

Advantages of investing in SIP:

  • Simplicity of choice. With SIP, you can start investing small amounts as small as Rs 500 each month and watch it grow.
  • Rupee Cost Averaging:
  • Flexibility:
  • Higher returns:
  • Power of compounding:
  • Acts as an emergency fund:

How many types of SIP are there?

Besides this, it may be surprising for you to know that there are four different types of SIP plans available in the market.

How does SIP work with example?

Under top-up SIP, you can increase the existing SIP amount periodically (for example, you could increase your existing SIP of Rs. 1,000 per month by Rs. 500 after every 6 months; this means, after 6 months, your monthly SIP will become Rs. 1,500; after another 6 months, it will rise to Rs.

Which type of SIP is best?

Top SIP Mutual Funds in India

SIP Plans Type 5 Year
SBI Bluechip Fund Equity Fund 0.95%
SBI Magnum Balanced Fund Balanced Fund 17.27%
SBI Magnum Gilt Short Term Debt Fund 9.38%
SBI Small Cap Fund Equity Fund 8.40%

What are the features of SIP?

A Systematic Investment Plan (SIP) gives flexibility, long-term gains, regular saving, convenience, and investment starting as low as Rs. 500/Month.

What is the disadvantages of SIP?

Insufficient funds: Inadequate balance in the investor’s bank account can lead to dishonouring of the cheque or ECS (electronic clearance service) instructions. Averaged Returns: Since SIP averages cost, it also averages the returns earned by investors.

Is SIP tax free?

SIPs can be one of the best tax-saving instruments with high returns on your investments. You can claim a deduction of up to Rs. 1.5 lakh from your taxable income for investing in ELSS through SIPs under Section 80(C) of The Income Tax Act, 1961.

What are the 4 types of mutual funds?

What types of mutual funds are there? Most mutual funds fall into one of four main categories – money market funds, bond funds, stock funds, and target date funds. Each type has different features, risks, and rewards.

How is SIP calculated?

In an SIP, a predetermined amount is invested in the mutual fund every month. In a lump sum deposit, the amount invested is a constant figure on which the return is calculated….Absolute Return.

Initial NAV Rs. 50
Final NAV Rs. 65
Absolute Return [(Final NAV- Initial NAV) / Initial NAV]*100 [(65-50)/50]*100 = 30%

What are the risks in SIP?

Risk 1: The risk of SIP getting a negative return or price risk.

  • Risk 2: The risk being able to get your money back quickly or liquidity risk.
  • Risk 3: The risk of downgrade of a security or credit risk.
  • Risk 4: The risk of the company not paying the owners of the bond their due or default risk.

    • Is SIP return guaranteed?

    Many of them believe that investing through SIPs guarantee returns. It is not true. SIP is an investment option that allows you to invest in mutual funds, typically in equity mutual funds, periodically. It helps you to invest in a disciplined manner without bothering about the prevailing market conditions.

    What are 3 types of funds?

    There are three major types of funds. These types are governmental, proprietary, and fiduciary.

    What are the 6 types of mutual funds?

    There are six common types of mutual funds:

    • Money Market Funds. Money market funds invest in short-term fixed-income securities.
    • Fixed Income Funds. Fixed income funds buy investments that pay a fixed rate of return.
    • Equity Funds. Equity funds invest in stocks.
    • Balanced Funds.
    • Index Funds.
    • Specialty Funds.