Systematic Investment Plan(SIP)


Systematic Investment Plan- When an investor choose a fixed amount (to be invested every month) in a certain fund (or a group of funds) that is called SIP. Hence, SIP is not an investment, it’s a mode of investment. SIP is a smart & hassle-free mechanism for investing in Mutual Funds.

SIP is a great enabler. It disciplines investors to invest a fixed, pre-determined amount. With a planned approach towards investments, SIP not only helps you build wealth but also instills the habit of savings. In short, SIP is a simple and smart way of investing in mutual funds. Minimizing risk and creating wealth.

How Does SIP Work?

When you start a SIP investment, your money is invested into a specific mutual fund scheme (decided by you) and gets auto-debited from your bank account. In return for that investment, a certain number of units are allotted to the SIP investor. A number of units are based on the current market rate (known as the net asset value or NAV) on the date of the investment.

sip formula

Additional units of the mutual fund scheme are purchased at market rate each time a debit takes place from your account. The units so purchased are added to your account (commonly known as client folio number or account number). This is where SIP is magical. It enables investors to buy at all market levels hence averaging smartly. This is exactly why SIP has gained prominence the world over. As it helps in rupee cost averaging. If the markets are down a SIP investor automatically ends up buying more units and vice versa. This feature of SIP creates exceptional wealth in the long run. In fact, steeper the downturn, better are the returns. Though Simple, but SIP is a very powerful concept.

How to Start SYSTEMATIC INVESTMENT PLAN (SIP)

  • Check your KYC compliance. If you are not KYC compliant, Mutualfundwala will help you complete your KYC formalities.
  • Choose an amount you wish to invest. Also, identify the financial objective for investment. You may even invest to save tax, but the wealth created can be used for your child’s higher education.
  • Team Mutualfundwala will assist you with identifying your financial objectives recommend best suited schemes to accomplish those objectives.
  • Choose a date for investment. This is the date on (or after) which, your account shall get debited with the SIP amount. Fill up the form and team mutualfundwala will do the rest.
  • Use features provided by Mutualfundwala, like online portfolio viewer and mobile app to regularly monitor your funds. Your RM (relationship Manager) will update you for changes if any.

Key features of SIP

  • Investors can stop a SIP anytime. It normally takes 30 days to start or stop a SIP
  • You can increase and decrease the amount of SIP as well. This done by stopping the existing SIP and starting a new one with higher or lower amounts.
  • You can change the bank for auto debits.
  • You can change the SIP dates as well.

Best SIP Mutual Funds

Scheme (Returns as on Sep 19, 2017) 6 Months 1 Year 2 Years 3 Years 5 Years
Mirae Asset Emerging Bluechip Fund (G) 18.5% 31.2% 27.7% 24.8% 31.8%
L&T India Value Fund (G) 16.2% 28.5% 22.5% 20.5% 26.9%
Sundaram Rural India Fund (G) 16.1% 23.2% 28.7% 21.5% 22.8%
L&T Emerging Businesses Fund-RP (G) 25.6% 42.2% 32.8% 25.2% -
SBI Blue Chip Fund (G) 12.6% 15.5% 16.0% 14.5% 19.8%

Systematic Investment Plan


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