INSUBCONTINENT EXCLUSIVE:
SIP plans: An SIP can be started with an amount as low as Rs 500, experts say.A Systematic Investment Plan, or SIP, is a method of investing
in mutual funds, wherein an individual can contribute a small amount regularly - on a weekly, monthly or quarterly basis - to build the
desired corpus over a period of time
According to financial experts, approaching mutual funds through the SIP route is a disciplined way of investing - one that helps in
long-term wealth creation through compounding returns as well as protection through rupee-cost averaging
Depending upon the timeframe selected by the investor, the money is deducted from the designated savings account at regular intervals
one's financial goal, time horizon and risk profile
Offer Safe Returns)What are the benefits of investing in SIPsAccording to Archit Gupta, founder and CEO, ClearTax, if an investor parks a
other hand, with SIPs, the money is spread over time and only some parts of the entire investment is likely to face the market
volatility.""Rupee-cost averaging""An SIP allows an investor to put the money at different levels of the market cycle
When the market is low, the fund manager buys more units and can sell high when the market is at its peak
It helps in reducing the per-unit cost of buying the units
SIP involves zeroing down a mutual fund, the investment amount, the frequency and the tenure
"Choosing the fund and tenure is based on the financial goal which depends upon the return expectation and risk appetite
The investment amount and frequency depend on investible surplus available as well as the nature of the cash flows," he adds
For a high reward ratio, he/she should invest in mid- or small-cap funds," opines Ritesh Ashar, chief strategy officer, KIFS Trade Capital
"There are high liquidity funds available as well in the market
Hybrid funds are also available for investors who want to have a balanced portfolio
Individuals should invest in funds which give high and consistent returns."SIP allows investors to opt for a tenure between six months and
In the words of Brijesh Parnami, CEO, Essel Wealth Services, "(The) higher the tenor, higher is the growth
This is the fundamental principal
with an amount as low as Rs 500
"However, the amount of the SIP should be based on the target amount and investible surplus," suggests Lav Kumar, head product and business
There are various types of SIPs available in the market and a basket can be created with various funds depending on one's risk appetite
Pandit, founder of Happyness Factory.How to plan your savings for an SIP investmentAccording to financial experts, an SIP should always be
Rachit Chawla, founder and CEO, Finway, cites the following example to explain this:"Suppose a car is priced at Rs 6 lakh now but five years
down the line, it will cost 20 per cent more considering the inflation
Now according to your active income or pocket, you have to divide that amount in such a way that your SIP gets auto deducted so that you can
buy that car after five years.""It is always advisable to have multiple SIPs for different goals of life
For retirement I would suggest debt, and for wealth increase equity is the best option
One should divide the goals of life to buy something, for retirement, for financial freedom, and wealth maximistion
money into any other investment product
"Many fund houses allowa monthly, bi-monthly, fortnightly and, in some cases, daily frequency as well
"For instance, if Ram is running a Rs 5,000 SIP in a particular fund, he can set it up so that the SIP amount increases by Rs 2,000 every
investor doesn't have to choose an end date for the plan
Once the goal is met, the investor can stop the SIP by sending a written communication to the fund house
