What are the types of Systematic Investment Plans in India
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What are the types of Systematic Investment Plans in India

  • Highlights

  • SIPs promote a healthy habit of disciplined savings

  • Investors in India can choose from a wide range of SIP options

  • Choose your SIP basis your cash flow needs

You must have been told a countless number of times that SIPs are the best route to increase your wealth, that they provide the best return on investment (ROI), etc. You may have considered investing in SIPs too, but setting aside a fixed amount regularly becomes difficult.

On particular months, you fall short of cash in order to meet your other liabilities. And on others when you are able to save up a handsome amount you tend to indulge in impulsive buying instead of investing the extra money. So, should you drop your plans of investing in SIPs? No, to create wealth, it’s imperative to build a disciplined habit of saving, no matter how small the amount. Click here to start investing through Bajaj Finserv.

Mutual fund houses are aware of the needs of an investor. As a result, SIPs have evolved over the years, transforming payment options available to the investors. Read on to know the five types of SIPs available to Indian investors.

1. Step-up or Top-up SIP

This variant allows you to increase the amount invested at regular intervals. This is particularly suited for investors with irregular income as in the case of self-employed individuals, and professionals with higher variable income. Top-up SIPs let you invest sudden profits or bonus to enable early accomplishment of financial goals. Such facility also enables you to take advantage of well performing funds by adjusting your investments accordingly.

2. Flex SIP

Also known as Flexible SIP, this option allows you to regulate investment based on your cash flow. In times of a cash crunch, you can choose to forgo of SIP payments for a few months and then return to the usual payment cycle when your financial situation stabilizes.

You can also choose a trigger based option, where in case of increased cashflow you can invest the surplus amount in your existing portfolio.

3. Trigger SIP

Experienced investors can take advantage of trigger SIPs. This type is suitable for investors having sound knowledge of financial markets as this involves speculations and regular market tracking. An investor can set either an index level, NAV, event or a particular date to start this SIP. You can set NAV or capital increase or decrease trigger to start investing in a particular fund.

4. Perpetual SIP

Generally, while signing the SIP form you must enter the start and end date. The plan tenor is normally 1 year, 2 years, 3 years, 5 years, etc. After your SIP matures you can renew it, but due to operational issues most investors delay this process. If you leave the end date blank, by default you opt for perpetual SIP, continuing till 2099, unless you provide written communication to the fund house.

5. Pause SIP

In a financial crisis you can pause SIP payments instead of stopping them completely. Thus, you can avoid the process of restarting your SIPs. SIPs can be paused for 1 to 3 months by submitting the pause form to your asset management company and a bank mandate stating the same. However, not all mutual have this option.

Click here to contact Bajaj Finserv for more information.

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