Everyone has the dream of living a quality and luxurious life without working endlessly day in day out. You might also be living with the vision of investing in some way to have a better future ahead? No worries, Systematic Investment plans are there for you. Just don’t halt the dreams anymore.
SIP is the way of investing in mutual funds, as by the word it is a systematic way of permanently(fixing till a certain period) investing some amount of money.
This way of investing allows you to set up a certain time and date to put your money and lets you use this to buy funds. Usually visualizing and putting money in the market is a risky and unpredictable game. Here you put money afterward you decide where to invest or buy funds.
This investment plan comes with several benefits like:
- Compounding: The amount you have invested gets reinvested in some period. This might seem a rough game for a while but with years of investment, the gains are appreciable.
- Low investment: You can initialize this investment as low as Rs. 500.
- Easy and trustworthy outcome: Market research and profit analysis are not necessary unlike other investing. This is with your convenience and with a little knowledge about investments you can earn bigger amounts.
How to invest? A step-by-step guide.
Step 1. Brainstorming about SIP: It is necessary to calculate the risk and examine if I am ready to tolerate the kind of loss if I face any. Investing is for your own financial goal. It is for the future you want to build and live like. So, a little risk is worth the cost.
Step 2. Choosing the best fit: A thorough research on which company to start your mutual funds and what is their last year’s performance is a must. Then visit and have all queries clear so that you won’t miss anything. Then fill out the form and submit the required documents like:
- Cheque of monthly SIP amount.
- Cancel cheque.
- Proof of residential.
Step 3. Select a date to deduct the amount: It is necessary to wisely decide when the bank will auto-deduct the amount from your account so that it is easier for you to take care of other expenses too. The cycle of deduction will go on that way, this only changes if you wish to re-set it.
Step 4. You can also customize the SIP payment options whether you want online transactions or offline facilities. Tho auto-deduction is a very easy and smooth way.
Step 5. Stick to the plan for a longer time: It is advised and also a wise move to stay calm if you want this amount to become a meaningful wealth for your future to shine bright.
All the busy adults who have no time to invest can feel relaxed and spend a fixed amount every month for a period while it becomes worth it.
Top 5 best SIP Plans in India in 2022.
Axis Bluechip Funds
This type of company majorly seeks high-risk appetite investors, as the company is equity-oriented. The turnover is high with the risk but the long-term investment is worth the cost. You can start investing with a monthly investment of Rs. 5000 and 14.05% expected annual return.
Axis Focused 25 Fund
This is an open-ended equity type of fund with high risk and high return investments. It demands a monthly investment of Rs. 5000 and expected annual return of 18.27%.
DSP Equity Fund
This is also an open-ended equity fund with a long investment period. This also allows debt and money market instruments to stabilize the liquidity. Here the risk factor is high but the investment return can be seen over in 3-5 years. It has a monthly investment rate of Rs. 5000 and expected annual return of 14.36%.
HDFC Balanced Advantage Fund
This is known to be one of the best long-term growth investments. It predominantly allows investment in equity and debt instruments. This has a planned monthly investment of Rs. 5000 and expected annual return of 16.84%.
ICICI Prudential Bluechip Fund
This is also an open-ended equity-type but funds majorly in large capitals. The objective is to have a long-term investment in equity and equity-related security with long-term capital appreciation. It has an annual return of 15.17% and the same monthly investment.
Pros and Cons of SIP.
- No requirement for a lump sum amount.
- Maximum return.
- Rupee cost averaging.
- Long-term goals.
- Customization in the payment period is available.
- Less control.
- Average returns.
- The rising market gives a lower return.
- Difficulty in calculating returns.
Taxation on SIP
The taxation is the same for SIP and Lumpsum but their calculation is somewhat more elaborated here. Since SIP investment is monthly or in intervals so the calculation of tax is likewise.
If SIP is held for less than a year, then the tax is at 15% and is termed as a short-term goal. Taxpayers get to invest lesser periodically instead of the lump sum amount at once which installs a sense of financial discipline.
Some Frequently Asked Questions On SIP Investment.
What is the minimum age to invest in SIP?
ANS. There is no such minimum age to invest in SIP. Although if you want to start this on your own you have to be above 18 years.
Can one cancel the SIP request?
ANS. Yes, this can be done anytime.
Are there any brokerage charges added?
ANS. No, there is no such but if you have a translation SIP then some set amount is deducted.
How many days does it take to register for SIP?
ANS. Maximum 7 days.
Is there a restriction in the amount?
ANS, One can invest up to Rs. 5 lakh per transaction.