Finances & Money

SIP Investments – 3 Things You Must Know

For our readers from the great subcontinent of India.

Systematic Investment Plan, in short SIP, is a scheme where the investor can invest his hard earned money in terms of fixed amounts every month.

Investments can be done in small amounts on weekly, monthly, quarterly basis or a lump sum can be paid once in a year.

Starting With SIP:

To open your account in SIP, all you require is a computer or any system with working internet connection. Before starting, all you need to know is about, Know Your Customer requirement (KYC) which is a must in mutual fund investment.

How Does SIP Work:

Through SIP, investment becomes easy and flexible. When a SIP scheme is applied, the money gets debited automatically from the bank account on a stipulated interval, and this money becomes an investment to the mutual funds purchased. Based on the NAV (Net Asset Value) of the funds, certain number of units are allocated per day. Each time an investment is done, additional units get added to the account automatically based on the ongoing market rate.

When the prices are high, the investors buy more units, and when the prices are low, they buy fewer units.

Benefits for SIP Users:

Once the account is created, the following benefits shall be provided to the users.

• Free Voice and Video call facility over the internet.
• Unlimited number of users can be added.
• Each individual user gets a unique SIP account which can be used to provision VoIP desk phones, softphones, mobile VoIP SIP clients,
• Adding up to 100 users is absolutely
• Make and receive calls freely from any SIP address over the internet.
• Extension dialing facility at no cost for an entire team to communicate.

Benefits of Investing in SIP:

• Disciplined saving
• Long-term gains
• Flexibility
• Convenience and
• Moderate risk.

Benefits for Investors Under SIP Schemes:

Rupee cost averaging, and power of compounding are the two best methods where investors are benefitted. Let us have a glance at how they work and what are they.

• Rupee Cost Averaging:

This method gives a very clear picture to the investor in terms of which is the best time to invest and which is not like the stock market in India is very unpredictable, this helps the SIP users a lot to know and save. The money invested earns fewer units when the price is high and more units when the price is low. It also allows the SIP user to get a lower average cost per unit during evaporating circumstances.

• Power of Compounding:

Amount invested earns an interest which gets increased and collected over a period of time. The longer the tenure, the higher the fund value would be. Through the power of compounding, more wealth can be accumulated if the investment is for a longer period of time.

So start investing early to reap greater benefits in the long run.

SIP in Mutual Funds:

SIP is a channel provided and operated by mutual funds to help and guide investors to invest regularly in a well-phased manner. In other words, it is a financial planning tool that helps one to generate wealth by investing small amounts of money every month, over a period of time.

SIP Calculator:

It allows the investors to estimate the amount of returns they can expect after completion of a fixed tenure for a specific amount of money invested.

Have a fixed financial goal in mind, not a problem; SIP calculators also helps in calculating estimations which helps to choose the investments to achieve one’s respective financial goals for future.

Features and Benefits of SIP Calculator:

• Useful in calculating complex formulas and gives accurate results within seconds.
• Easily available online and absolutely free of cost.
• Delivers accurate results to estimate future returns for both beginners and experienced investors.
• It has a user-friendly interface, and it’s quite fast and accurate.

Mutual fund brokers and managers promote the usage of SIP calculators for the benefit of their investors.

Is SIP Tax-Free?

There are some investments which are approved by the government for saving taxes. For, e.g.: ELSS, if invested through this, tax benefits can be claimed under section 80C of the Income Tax Act. For this, all one can do is fill up the forms for investing through ELSS along with SIP form and a bank mandate form.

Best SIP Investment Plans:

Here are a few of the best choices presented for the convenience of the investors for SIP in mutual funds.

• Birla Sun Life Frontline Equity Fund
• ICICI Pru Top 100 Mutual Fund
• ICICI Pru Focused Blue Chip Fund
• Franklin India Smaller Companies Fund
• DSP BlackRock Microcap Mutual Fund
• Mirae Emerging Blue Chip Fund
• Kotak Select Focus Fund
• Principal Emerging Blue Chip Fund
• ICICI Balanced Mutual Fund
• HDFC Balanced Fund
• SBI Blue Chip Fund

Conclusion:

From all the above learned and shared concept of SIP, it is very much clear that these investment plans are the smartest and hassle-free ways of investments in mutual funds. Also, it is beneficial to the customers through the facilities being provided, SIP calculator, etc. This is surely a successful potential investment plan for all.

James Hendrickson

James is an internet entrepreneur, blogging junky, hunter and personal finance geek.  When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College.  He loves individual stocks, bonds and precious metals.