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Types Of SIPs In India

Published On Aug 21, 2021

SIPs also known as Systematic Investment Plan are an easy way of investing in mutual funds in a regular manner. SIPs work on rules of investing regularly allowing the investor to build a corpus over a period of time. An investor is required to invest a certain amount in mutual funds on a monthly, quarterly or weekly basis. SIPs are periodic and consistent investment tools just like recurring deposits. Under SIPs, the investor has the flexibility to stop anytime. 

What are the Benefits of Investing in SIPs?

Below mentioned are some benefits of investing in SIPs:

  • You don’t need a large sum of money to invest in SIPs
  • Timing the market is not required while investing in SIPs
  • SIPs allows power of compounding
  • SIPs allows Rupee Cost Averaging

Know more about: Difference Between Term Insurance And SIP    

Different Types of SIPs Available in India

Before investing in SIPs you must know the different types of SIPs. Below mentioned are the different types of SIPs available in India:

  • Flexible SIP: Flexible SIPs are also known as Flex/Flexi SIPs. In Flexible SIP the investor has the flexibility to adjust the SIP amount according to the financial condition keeping in view the market conditions. Investors can choose to invest in SIPs in case the market is falling and choose to opt for a lower SIP amount when the market reaches the high. In case of an unpredictable financial crunch the investor can choose to reduce or increase the SIP amount. 
  • Top-Up SIP: As your income increases over time, you choose to Increase your SIP investment with help of top-up facility provided under SIPs. Under this facility, the investor can increase the existing SIP amount periodically. This is an ideal option for salaried people who are expecting a rise in income. 
  • Perpetual SIP: Perpetual SIPs are referred to the SIPs which do not have a mentioned end date. If you start investing in SIPs and do not mention the end date it may be considered a perpetual SIP. Every SIP that does not have a mentioned end date is transformed into a Perpetual SIP which shall run till 2099. If the investor wishes to stop the SIP, he/she can submit a written request to the fund house to stop the SIP. 
  • Trigger SIP: Under Trigger SIP an investor can set a trigger for their SIP investment. The investor can mention their SIP amount that is to be withdrawn from their bank account which can be used to buy units of another scheme. It is advised that experienced investors should opt for the trigger SIPs. 

To Conclude

A SIP is a great tool for investment which allows you to invest on a regular basis for over a period of time to create a corpus for a financially secured future for yourself and your family. Before investing your money in SIPs you must know how they work and what are the different types of SIPs. You can easily invest in a basic SIP, but you can also explore different types of SIPs before putting your money in a basic SIP. 

Also read 

How Can I Invest in a Mutual Fund Through SIP?    

Popularly Opted Term Insurance Sum Assured

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