SIP Tips: How to choose the right SIP type for better returns..
When we hear the name of SIP, only one picture is formed in our mind - a fixed amount is deducted from the bank account every month on a fixed date and deposited in a mutual fund. This is true, but this is only a part of the story, just the first chapter. Most people remain limited to this in the world of SIP. But do you know that SIP is not a simple toolbox, but like an advanced Swiss Army knife, which has different tools for every situation and every need? Today, we will take you to this advanced level of SIP. We will tell you about 6 different types of SIPs that can make you a 'smart investor' from a common investor. Let us know which SIP is made for you according to your financial goals and your personality.
First step of SIP - Regular SIP
This is the most common SIP, in which you deposit a fixed amount every month or at a fixed time. The money is automatically deducted from your bank account and invested in the mutual fund scheme. The advantage of this is that when the market is expensive, you get fewer units, and when it is cheap, you get more units for the same amount, which makes your purchase cost average.
King of market fluctuations - Flexi SIP
In this, you can change the installment of SIP according to your needs. For example, when the market is down, you can invest more money so that you can get more units at a cheaper price. And when the market is very high, you can reduce the investment. You can also change the installment amount according to your financial condition. When there is a shortage of money, reduce the installment, and when you have extra money, increase the installment. This is also called Flexi-SIP.
Investment will also increase with an increase in salary - Step-up SIP
In this plan, you can increase your SIP amount after a fixed time. This is also called Top-up SIP. For example: You can start a monthly SIP of ₹10,000 and choose to increase it by ₹1,000 every year. This is considered a very good option for working people whose salary increases every year.
Long-distance SIP - Perpetual SIP
In most SIPs, you specify how long you will invest (like 5 years or 10 years). But in this SIP, there is no end date. You just specify the starting date. This means that your investment continues until you tell the fund company to stop it.
Automatic weapon of smart investors - Trigger SIP
In this SIP, you can set a 'trigger'. Trigger means a condition. When that condition is met, only then will your money be invested or withdrawn. This condition can be anything, such as a sudden drop in the market, Sensex reaching a certain level, or the NAV (price) of a fund reaching a certain level. When the trigger is set, your SIP can be started automatically, your money can be withdrawn, or you can switch from one scheme to another. This is very useful for those who invest based on certain principles and want to automate their investments.
Multi SIP - This plan allows you to invest in multiple schemes of the same fund company through a single SIP. For example: If you do a multi-SIP of ₹30,000 every month, you can divide this amount into five different schemes, investing ₹6,000 in each scheme. This makes it very easy to invest in multiple schemes and also diversifies your portfolio.
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
