While it is common knowledge that long-term investment in mutual funds through SIPs helps navigate market mood swings, there are other aspects of SIPs that investors have not fully realised.
SIPs serve as potent investment tools helping investors pursue their financial objectives in a systematic manner.
India has been scoring on SIPs. As per AMFI, Monthly systematic investment plan contributions hit a high of ₹19,186 crore in March this year, surpassing January’s ₹18,838 crore. While it is common knowledge that long-term investment in mutual funds through SIPs helps navigate market mood swings, there are other aspects of SIPs that investors have not fully realised.
Have you been doing SIPs right? Here are some types that you probably don’t know
Tenure-based SIPs: Structured to run in the range of 3 to 10 years, this kind of SIP offers investors the benefit of flexibility to align their investments with specific financial goals and risk tolerance levels. A fixed tenure fosters discipline while leveraging rupee cost averaging and compounding benefits.
Multi-SIPs: These distribute funds across multiple mutual fund schemes concurrently. This strategy helps in risk mitigation and capitalizes on the unique attributes of different funds, enhancing the overall performance of your portfolio.
Combo SIPs: These invest in both equity and debt instruments. This diversified approach not only mitigates risk but also ensures consistent returns, best suited for risk-averse investors.
Flexi SIPs: Gives one the flexibility to adjust investment amounts based on market conditions, Flexi SIPs allow for varying investments. For instance, investors can capitalize on market downturns by increasing their investments and reduce exposure during bullish phases.
Step-up SIPs: Designed to accommodate increasing investment amounts over time, step-up SIPs enable investors to augment their contributions at regular intervals.
Trigger SIPs: Picks predefined market triggers, these invest in mutual fund schemes when specific market conditions are met, such as a predetermined percentage decline in the market.
Insurance SIPs: Integrating the benefits of systematic mutual fund investments and life insurance coverage, SIPs with insurance cover offer a hybrid financial product.
SIPs serve as potent investment tools helping investors pursue their financial objectives in a systematic manner. By comprehending the diverse categories of SIPs and their respective benefits, investors can devise a robust strategy tailored to their requirements. It’s imperative for investors to not only select suitable SIPs but also adhere to their investment goals with unwavering commitment and disciplined approach over the long haul.
