With an ever-increasing issue of financial security, it has become quite important to make smart investments today, to make sure you end up with a better tomorrow. The market offers various opportunities to make an investment with a plethora of investments plan that has sprung out over time. Because of such a variety available, and the increased flexibility in the terms of these plans, one can get confused as to which ride to undertake. This calls for proper and effective guidance to the layman, which enables them to go make the best choice for their safe future. One of the most popular plans nowadays is Systematic Investment Plan (SIP).
It is basically a plan that lets you make investments in mutual funds at regular intervals. It is a strategic investment plan with options to invest a portion of amounts at intervals of varying duration, i.e, on a Weekly or Monthly or Quarterly basis. It can be utilized by people across all age gaps, including the youth as well as senior citizens. The investments under this plan are usually made under the Equity Mutual Fund schemes.
Basic Features of SIP
To get better acquainted with the system of the SIP, the basic features are enlisted as follows:
- A Periodic Investment plan.
In this mode of investment, investors deposit money into bank accounts which are then invested in particular mutual funds.
- Allocation of units as per the Net Asset Value (NAV)
Investor acquires some units with regard to the current Net Asset Value of the investment.
- Addition of units upon subsequent investments.
Whenever additional investments are made, more units are allotted to the investor over the units previously granted.
Benefits of SIP
Systematic Investment Plans (SIPs) provide numerous benefits to the investors. The benefits are enlisted as follows:
- Investments have to be made at regular intervals and not in a lump sum manner.
Whether on a weekly basis or monthly or quarterly basis, investments are split up as per the choice of the consumer in these modes, and they’re not required to pay a lump sum amount as under various mutual funds in the market.
- Lower starting investments.
Under regular mutual fund schemes, a minimum of Rs. 5000 is required to initiate the investment at the time of the first investment. However, that cost, in an SIP, can be brought down to a fascinating low of Rs. 500. Thus, SIPs can be initiated with much lower amount than regular Mutual fund investments.
- Flexible Nature.
The investors enjoy a great deal of convenience with the flexibility underlining SIP. There are no penalty or costs for discontinuing a Systematic Investment Plan which lets the investors stop their investment as and when they want.
- Hassle-free process and a smooth journey.
Investing in a Systematic Investment Plan is extremely simple, now that the facility of initiating an SIP investment is widely available online as well. The average time nowadays, is about 2-3 weeks, for these applications to get processed and thereafter, access is provided to the users to access their mutual funds online.
- No starting fee.
Investors aren’t required to pay any starting fee in most of the SIPs nowadays. The cost for usage overtime is also negligible as compared to the benefits reaped by the investor.
- High Degree of Organization and discipline to the Mutual funds
These plans create an organized investment process which provides a good deal of financial security as well as an order to the financial management. Even handling one’s SIP is quite simple.
- Lower Amounts of Regular Investment.
As previously mentioned, the starting costs are almost non-existent. The initial investment can be as low as Rs. 500 and next turn onwards, it is the choice of the investor to go for a higher investment amount or not.
- Saves the Investors from complications and uncertainty.
Other investment markets are highly uncertain and dicey as compared to the working concept of the SIPs. Here, an investor gets units in return for investment as per the availability. The no. of units may vary with their prices.
Process of Systematic Investment plan
The process of Systematic Investment Plans is quite simple too. It employs the Electronic Clearing System as per which the money directly gets debited from the bank account of the consumer. An investor should ensure that the regular investments are punctually handled. Any default with respect to the deadlines will have a depreciating effect on the investment. It is always preferable to use High-speed internet while dealing with SIPs online for it reduces the chances of any technical errors in the process and helps the consumer in a significant way.
Ultimately, a SIP is one of the most beneficial investment schemes available in the market, offering returns at low and regular amounts of investments, imparting a better sense of security to you. With us, you can browse various plans on Finbucket as per your circumstances and proceed to invest in Systematic Investment Plans, smartly.