SIP Archives -

SIP is Making Investment Easier For Everyone

Sat, 01 Oct 2022 05:54:08 +0000

The Buyt Desk

Investing in shares of fortune companies is indeed heaven. But did you know the share value of these companies ranges in thousands? One share of Honda Motor Co Ltd.’s is

Rs 3,302 and that of, Maruti Suzuki, Rs 8,801. How would you buy their shares when you have a limited corpus?

The Mutual Fund Systematic Investment Plan is an answer to this. You can use many facets of SIP to buy shares of these highly valued stocks by investing a minimum sum.

You can start SIP with as small as Rs 100, however, the investment amount and tenure depend on your financial goal. The SIP calls for a monthly commitment. Some funds let you

Invest with as little as Rs 100. There are many facets of SIP that gives an advantage to investors.

You Can Withdraw Funds Without Stopping SIP

Two types of mutual funds are there, open-ended funds and close-ended funds. The open-ended funds give investors the flexibility to enter and exit the fund at any point in time. It comes with no fixed maturity period. This type of mutual fund allows investors to withdraw the amount from SIP anytime without stopping it. The fund houses offering this service follow the FIFO method for withdrawal, i.e. first in and first out. Units invested first can be withdrawn first. The fund houses give this option to save investors short-term capital gains tax as much as possible. This investment model turned helpful to investors during the COVID-19 period when people saw a fall in income. In such a situation, the pause feature of SIP helped investors.

They stopped it for some time and restarted it when their income regularized. In this option, an investor can pause the SIP for 3-6 months. The maximum gap time for this is six months.

All SIPs ELSS Are Locked

Similar to lump-sum, the SIPs also come with lock-ins and capital gains tax. In equity-linked saving schemes, there is a locked-in of three years for all investments. It applies to SIPs also.

E.g., a SIP starting in an ELSS fund in 2022 will become lock-in-free in 2025. The next instalment will become lock-in free in 2026. Investors can withdraw the accumulated amount from ELSS only when all their instalments will complete the three-year lock-in.

Debt Fund Also Come With the SIP Option

Debt funds are considered the safest of all mutual funds because of the low risk and better returns it offers. And fund houses give the facility of investing in debt funds via SIP. It is better than a fixed deposit. The crux is investing in mutual funds through SIP is thoughtful if you have all information about Mutual Fund SIP facets.

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4 Types of SIP That Will Help You in Becoming a Better Investor

Sun, 15 Aug 2021 06:39:54 +0000

The Buyt Desk

A Systematic Investment Plan i.e SIP allows us to invest regularly in mutual fund schemes. You keep paying a monthly instalment towards a scheme and purchase units on a monthly basis. SIP gives you the convenience to invest in small measures. Three advantages that you get from SIP are-

Rupee Cost Averaging
Power of Compounding
You can start your investment with a small amount

Here are 4 ways of investing your money through SIPs-

1)Regular SIP

This is our good old way of periodic investment. Every month you fix a date and an amount that will go towards a mutual fund scheme of your choice. There is no pre-determined end date or tenure. The investor can at any time redeem the funds as per his /her requirement. This SIP is also called a perpetual SIP wherein the investor doesn’t have to mention the end date for the scheme.

2)Step-up SIP

The investor can increase his/her SIP amount depending upon his cash flow situation. Basically, you increase your SIP by adding a top-up amount. You may start a SIP in a scheme with a small amount. But over time you get a hike in your salary or you receive a bonus that you want to add to your SIP amount and increase your investment. A step-up SIP is a way to consistently increase your SIP amount. You decide that every year you will increase your SIP amount by a certain percentage so that you can accumulate a good corpus. If you are investing Rs 5000 every month and the expected return will be of 12% then it will take 20years to accumulate a corpus of 45.5 lakh. However, if you step up your SIP every year by 10% then you can achieve the target of 45.5 lakh in 16 years.

3)Flexible SIP

As the name suggests this SIP gives investors the flexibility to increase or decrease the amount of SIP as per their money situation. They must specify a default amount for their investment when they begin their SIP and 7 days before the SIP date the investor will have the option to modify the amount.

4)Smart SIP

This SIP allows you to modify your SIP amount as per the market conditions. It is guided by the ups and downs of markets. It will buy more units for you when the markets are at low or undervalued and will slow down the pace of SIP when markets are trading at highs. Smart Sips will skip your SIP payment when markets are at highs and will park your money in a liquid fund and will wait for a better opportunity to transfer the money in an equity mutual fund.

Hope we were able to give you a better understanding of various types of SIPs.

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Why Should You opt for a TopUp SIP?

Sat, 31 Jul 2021 17:54:15 +0000

The Buyt Desk

Even as a beginner in investment, you would have heard of the term “SIP.” What does it mean? A systematic investment plan (SIP) is a method of investing in mutual funds. Instruct your bank to auto-debit a fixed amount monthly, quarterly or half-yearly to a particular fund scheme. Most significant fund houses offer a variant of a SIP, known as a TopUp SIP, SIP step-up, or Booster SIP.

What is a TopUp SIP?

Let us understand TopUp SIPs through an example. You have a monthly SIP of Rs.10,000. Now, you wish to keep increasing the SIP amount by 5,000 every year. Using the TopUp SIP facility, you can instruct the bank to auto-debit an increasing investment of Rs.5,000 every year on a fixed date.

Hence, you can increase the investment amount of an existing SIP after a predetermined period through a TopUp SIP. You can choose to top up by a fixed amount or a percentage. It is good to consider your financial capacity while making this decision. There are SIP TopUp calculators available to help you decide.

You can choose from monthly, quarterly, or half-yearly TopUp SIP. If not set, the default period is half-yearly.

Who can go for a TopUp SIP?

If you already have a SIP, then the TopUp SIP option is for you.

How is a TopUp SIP different from a traditional SIP?

In a traditional SIP, you do not have the choice to increase the amount of investment. You have to open another SIP to do so. However, a TopUp SIP provides the option to increase the investment amount after a regular interval.

What are the benefits of TopUp SIPs?

Financial experts support investment in TopUp SIPs because:

These SIPs can shield you from year-on-year inflation. You can choose to increase the investment amount at least by the inflation rate.
Usually, income increases on an annual basis. Therefore, you have the financial capacity to increase your investment annually.
The practice of topping up a SIP can enable you to achieve your financial goals sooner.
It also saves you the hassle and time to look for a new investment when your earnings increase.

Is there a challenge with a TopUp SIP?

The substantial benefit of a TopUp SIP can also be a challenge in maintaining it. What will happen if the employer does not increase the salary? What if there is a loss of income? Due to the COVID-19 pandemic, a large number of the workforce became jobless overnight.

Bottom line

Are you in a stable job?
Are you earning passive income?
Do you have regular rental income?
If you answered yes, then TopUp SIPs are for you.

Do you want to buy your dream house in 12 years than 20 years? Opting for a TopUp SIP can help achieve financial goals earlier.
Do you want to become inflation-proof? Opt for a TopUp SIP. Increase your existing SIP by the annual inflation rate.

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How to start a SIP?

Wed, 24 Feb 2021 17:51:46 +0000

The BuyT Desk

The latest data by the Association of Mutual Funds of India (AMFI) tells us that retail investors opened 16.44 lakh new systematic investment plan (SIP) accounts in January 2021. It makes it quite clear that retail investors are keen to invest in mutual funds via SIPs as they offer the convenience of periodic investment of as low an amount as Rs 500 in a month. When Indian markets touched high, many investors booked profit, and there was a massive redemption from mutual funds. But at the same time, we see a record number of new SIP registration too.

The investor has to select a mutual fund of his choice. Then link the MF account with your bank account for automatic monthly transfers into the chosen SIP.

Steps to follow to start online SIP-

Must have documents- PAN card, an address proof, a passport size photograph and a cheque book.
Complete your Know your Customer (KYC).
After completing KYC, you have to select the fund and register yourself with the company on their website or nowadays, most of them have a mobile application that can be downloaded on your phone.
Check for the ‘Register Now’ link to register a new account.
You will have to fill out your personal details and contact information in a company’s form.
You will set up a username and password for transacting online.
Bank account details will have to be submitted from which the SIP payments will be debited.
Once you complete the registration process, you will be able to start your purchase.
It may take 30-35 days to start the SIP.

Why invest through SIP?

You don’t need a big amount to start the investment. A SIP can be started with a minimum of Rs 500 monthly.
You can stop your SIP at any moment when you face any kind of financial stress. There will be no penalty or fine for discontinuing a SIP.
You can restart a discontinued SIP investment without any hassle.
You can always increase or decrease your SIP amount as per your financial convenience.
They help you in leveraging various market phases. As you make your investment in small measures and periodically, you need not worry about the ups and downs of the market daily. When the market is up, you will be getting a good value on your investment, and when the market is down, you will be adding more units to your portfolio.
You will earn compounding interest on your investment. You will earn interest on the seed capital or the principal amount. The gains plus your principal amount will be reinvested further and earn interest.

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Don’T Gulp But ‘Sip’ Your Investment For A Long-Lasting Taste- 4 Advantage Of Sip Investment

Tue, 15 Dec 2020 10:10:39 +0000

By The Buyt Team

To enjoy a hot cup of coffee, you sip it and not gulp it down. Similarly, to enjoy what you earn for a long time, you need to SIP it. Systematic Investment Plan or SIP is a way of investing where you commit to paying a fixed amount every month towards a mutual fund scheme of your choice. No one has to remind you, or you don’t have to remember any dates to make payment. You choose a date and activate SIP with your bank, and every selected day of the month, a fixed amount is debited from your account and allocated towards your investment.

How do SIP works?

SIP investment gives a chance to invest a small amount over time rather than investing a one-time huge amount. The SIP amount can be of as low as Rs 500 and can go up to the level you want to invest. Every time you make a SIP payment, you are allocated the units of mutual funds depending on the Net Asset Value (NAV) of a mutual fund. With each SIP payment, additional units keep getting added to your account depending on the market rate. With every investment, the amount gets reinvested – and the cycle goes on.

Let’s take an example wherein you make a SIP payment of Rs 500 every month for ten years. The expected return from the scheme is 10%. After ten years one has invested Rs 60,000 earned a return of Rs 43,276 on the investment. So after investing Rs 60,000, the corpus you create after ten years is Rs 1,03,276.

Benefits of SIP

Financial Discipline- Once you commit for a SIP investment, there are no excuses. Your contribution will not be dependent on our willingness or ability. There is no room of forgetting it because once you start the investment, a fixed amount gets debited automatically.
Ease of Investing- You don’t have to wait for a large amount of money to accumulate to start investing. It is not a lumpsum investment. You need to decide the amount that you are comfortable with and start investing. As small as Rs 500, every month is good enough.
Market Fall- On the downturns of the market, you will be tempted to discontinue. But for meeting long term goals, you should stick to the plan of contribution. You will get the advantage of rupee cost averaging on the value of units. When markets fall, you will accumulate more units, and when markets are at highs, you will earn fewer units averaging cost per unit.
Power of compounding- Little drops make the mighty ocean- this holds for SIP investment. You stagger your investment over the years. As your investment grows, the return is compounded over the years.

Systematic Invest Plan (SIP) are an efficient way to start your investment. If you are a beginner and not comfortable with tracking market movements, then SIP’s can be a good start. SIP helps in developing a habit of regular investment and gives you the ease of starting with a small amount.

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