What is systematic investment plan?

A Systematic Investment Plan (or SIP) is an investment mode through which you can invest in mutual funds. As the term indicates, it is a systematic method of investing fixed amounts of money periodically. When you invest steadily in this manner, it can become easier to meet your financial goals.

Is systematic investment plan a good idea?

SIP can be a good way to begin investing in mutual funds. This not only inculcates the discipline of saving regularly but also gives the investment a chance to grow in the long run. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

How does systematic investment plan work?

Systematic Investment Plan (SIP), is the ideal way of investing in mutual funds in a regular and systematic manner. A SIP works on the basic rule of investing regularly, enabling you to build wealth over time. Under SIP, you invest a fixed sum every quarter, month, or week as per your convenience.

Is SIP amount fixed?

Yes, you can. Though the most popular SIP is investing a fixed amount every month, investors can customise the way they put money via SIPs. Many fund houses allow investors to invest monthly, bi-monthly and fortnightly, according to their convenience.

Which SIP is best for 5 years?

Best SIP Plans for 5 Years in Equity Funds

• Axis Bluechip Fund Monthly SIP Plan. This is an open-ended equity scheme with a track record of outperformance.
• ICICI Prudential Blue chip Fund.
• SBI Blue chip Fund.
• Mirae Asset Large Cap Fund.
• SBI Multicap Fund.

Is mutual fund tax free?

Long term capital gains upto Rs 1 Lakh is totally tax free. Mutual fund tax benefits under Section 80C – Investments in Equity Linked Savings Schemes or ELSS mutual funds qualify for deduction from your taxable income under Section 80C of the Income Tax Act 1961.

Is SIP better or lump sum?

A systematic investment plan (SIP) is the most convenient way of investing in mutual funds. By opting to invest via an SIP, you eliminate the need to have a lump sum to get started with your mutual fund investment. Through an SIP, you can invest a small sum on a regular basis into the mutual fund scheme of your choice.

Can I lose money in SIP?

Mutual funds are market instruments. They invest in stocks, bonds, commodities, etc. All of these can lose value, and mutual funds can also lose value. The amount depends on many factors: type of fund, nature of market decline, the cash position of the fund prior to the decline, time period, etc.

Is SIP tax free?

If an investor is investing through SIPs in equity funds or balanced mutual fund schemes, then all the gains made after one year will be considered as long-term capital gains that will be completely tax-free.

Why is SIP bad?

Systematic investing can help avoid timing of markets. The unexpected fallout is that emerging affluent investors are afraid of making one-time investments in equity markets and mutual funds. Overdoing the SIP logic can be bad for an investor’s portfolio because it may keep her significantly under-invested in equities.