Understanding Systematic Investment Plan
The Systematic Investment Plan (SIP), a method of investing offered by mutual funds, allows an investor to invest a set amount of money over time rather than all at once. The monthly installment amount can be as little as 500, 1000, or more. SIPs offer the possibility for investors of automatic deduction of regular monthly payments from their bank accounts.
There is no better way for novice investor to begin their investing journey than with a systematic investment plan. The most crucial thing to comprehend when making a SIP investment is that it is a method of making a financial investment in mutual funds rather than an asset.
Types of SIP
There are Five different types of SIP. Their name and definition are listed below for your better understanding:
Regular SIP
The most uncomplicated type of Systematic Investment Plan is regular SIP, which requires periodic contributions from investors. A monthly, quarterly, bimonthly, half-yearly, or annual interval is all possible.
Flexible SIP
The only difference between the flexible Systematic Investment Plan and the regular SIP is the investment amount. The amount of a flexible SIP can be changed at any time by the investor. It enables investors to have more control over their portfolios.
Top-up SIP
The Step-up or Top-up SIP is a systematic investment plan (SIP) that allows participants to raise their investment principal at predetermined intervals.
Trigger SIP
When certain things happen, the trigger SIP becomes involved. Index levels, NAV levels, and beneficial market movements can alter the occurrences. It strengthens the mutual fund investment, but the investor must have a deeper understanding of the market for proper utilization.
Perpetual SIP
There is no end duration for the Perpetual SIP. The investment continues until the investor stops making it. The only distinction between a regular and perpetual SIP is that it continues as long as money is invested.
Many investors are drawn to SIP because it offers the lowest-risk mutual fund investments available; if you are one of them, Contact us at AMG Invest today!