A Systematic Investment Plan [SIP] is one of the ways of investing in a mutual fund, and it has become one of the most popular investment tools in the last few years. With an SIP investment, the investor has multiple flexible options. An experienced expert does all the hard work , making sure that your money is safely invested to make sure that your money grows systematically without too much risk. If you decide to invest in an SIP, you should first understand the options you have. You can use four kinds of SIP investment options. Study them well to know which plan matches your needs the best.
Types of SIPs
Here are the details about the four kinds of SIPs.
- Top-up SIP
This form of SIP investment works exactly how it sounds. You can use the top-up facility with this system by increasing the amount of investment on a regular basis, following the interval allowed by the particular plan. The benefit of this plan is that you can decide on how much to invest in the SIP depending on the performance of the mutual fund. This way, you can make sure that you get the best out of a well-performing fund. The better the returns, the more you can invest in the next cycle to increase your income systematically.
- Flexible SIP
This type is an upgraded version of the previous one. The flexible SIP investment allows you to not only increase but also decrease the amount of money you are investing in. You can use this plan to invest according to your income. You can also skip paying into the SIP if you do not have enough money flow during a particular investment cycle. You can then again invest more than the previous cycle when you have the capital. This flexibility allows you to invest and gain profits according to your financial state in any particular time period.
- Perpetual SIP
A perpetual SIP is an investment plan without an investment time limit. Just like any other investment plan, SIP too comes with the option to invest your money for a particular amount of time. It can be anything from a year to a decade or even more. However, with a perpetual SIP, you do not have to set an end date. This way, you will have the complete freedom to withdraw your funds at any given moment.
You can redeem the funds when you meet a particular economic target or when you think that the SIP is not performing as well as you had expected. You must remember that the SIPs with a fixed period of time can help you have more economic discipline, but it is always better to have your options open.
- Trigger SIP
With this plan, you can set a particular date or financial event, like an improved index level, when the SIP starts. However, this plan requires you to have in-depth knowledge of the financial market to eliminate the risks of losing money.