Systematic Investment Plan

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Investors are offered a plethora of options when they begin to start their investment journey. Right from different types of investments to different modes of investment, you can never fall short of options. What’s more, you are also offered various options if you decide to go with SIP mode of investment. Yes, you heard us right. There are different types of SIP that you can choose from. Here we will talk about these types of SIP and understand which one is better drawn to suit your financial needs.

Types of SIP

Here’s a list of the types of SIP investments offered to investors in India:

  1. Normal SIP
    Also known as vanilla SIP, these are the traditional types of SIP. Under this type of SIP, a fixed amount of money is invested in your desired mutual fund scheme for a fixed duration of time at fixed intervals. All these parameters are pre-determined by the investor before they invest in mutual funds via SIP.

  2. Top-up SIP
    This type of SIP offers the flexibility to change your investment amount over a period. As per your financial needs and resources, you can either increase or decrease this amount at regular intervals. This type of SIP makes sense for those salaried investors whose income or salary grow every year. They can choose to increase their SIP amount by a particular percentage or number. As we flourish in our professional lives, our income or salary is bound to increase. Hence, an investor must top-up their SIP investments as and when possible to reach their financial goals quickly.

  3. Perpetual SIP

Perpetual SIPs are those SIPs that are meant to go on forever, i.e. these SIP investments do not have any end date. So, an investor regularly invests in their mutual fund schemes for an indefinite period of time. However, one must understand that this does not mean that an investor is mandated to invest for an indefinite period. You can stop your SIP investment as and when needed. You just need to submit a stop form to your bank. This type of SIP was introduced to not create any hindrance in an investor’s power of compounding.

  • Flexible SIP
    This type of SIP is quite opposite to normal SIP. Flexible SIPs do not have any fixed investment amount, nor are they increased or decreased by a fixed percentage or number on a periodic basis. An investor has the option to alter their investment amount for each SIP instalment. All they have to do is choose a minimum and maximum investment amount. This type of SIP is ideal for those investors who have a irregular influx of money. Several investors with ultra-knowledge and understanding of the market also prefer this mode to invest more when the markets are low.
  • Trigger SIP
    under this type of SIP, investors can encash a part or even entire amount of their SIP investment. They can also automatically switch to a different mutual fund scheme as soon as the investment amount reached a pre-determined trigger point. Trigger SIPs are ideal for those investors who have a good understanding of the financial markets and are well-versed with the volatility associated with mutual fund investments.