Choosing the Right SIP for Investing

Choosing the Right SIP for Investing

Explore different types of SIPs and find your ideal investment plan

SIPs: Building Disciplined Savings and Good Returns

SIPs or Systematic Investment Plans are investment plans that help you start investing and keep it continuing. These allow you to make small investments directly from your bank account. In most types of SIPs, you can decide how much and how often you want to invest. The more you invest, the better return chances and wealth potential you generate. You will want to choose SIPs over any other investing or saving option for many reasons. The interest rates are impressive, the flexibility is inviting, and the tax exemption is the most significant thing one can ask for.

When you learn about all these perks related to SIP, you should remember what you have been told in the advertisements with great speed regarding the market risks. Now comes the question of which SIP to choose and how to avoid the risks related to it. Well, intelligent moves from educated decisions, proper market trends monitoring, and the performance of concerned mutual funds can take you a long way in this investment and wealth-making journey. Also, it would be best to consider the significance of reviewing the past performance of the SIP funds you are interested in.

Types of SIPs Ideal for Different Classes of Investors

There are mainly five types of SIPs with different features. Read along and find out which suits you best:

1. Regular SIP: for the beginner with a clear vision
   It is the most disciplined plan of all the SIPs discussed here. You select the term for which it will continue along with the amount and frequency of investment at the beginning, and you cannot change it further. This is the perfect SIP type to look for someone with a clear financial goal and ample money flow.
2. Flexible SIP: for the unsure earner
   Unlike the former, a flexible SIP allows you to amend your investment sum and frequency. You can increase or decrease the installment amount and adjust the timing. This SIP is the best option for someone with irregular money flow. You can increase or reduce the investment amount per the available resources.
3. Top-up SIP: for the settled employee
   If you have a secured job and get periodic increments along with the salary, there is no better option than the top-up SIP. Start with what you have and keep increasing the amount yearly, half-yearly or quarterly as per your increments. If things go well, this plan caters to phenomenal returns at maturity.
4. Trigger SIP: for the experienced player
   This SIP is one of the most unconventional SIPs you would ever hear. These are not regular SIPs, as the name suggests; in such plans, the investment takes place only when there is any kind of trigger for it, such as market pace, higher returns, good performance of share stocks etc. To invest in such adventurous SIPs, the investor has to have ample experience and knowledge of the investment world. They must have a high-risk appetite and patience to play well with the stats and the sum.
5. Perpetual SIP: for an unsure beginner
   This SIP is something we can call safe play. There is no fixed tenure in perpetual SIPs. The investor puts in money until he finds out what is right and can extend the duration as long as he wishes, and can liquidate the fund whenever they think it is correct. Individuals who are very new to the investment world and want more control over the money they invest and don't wish to risk their riches but still want to have a taste of the investment world can go for such SIPs.

Complimentary Tips for Choosing the Right SIP

While choosing a SIP, ensure you are not driven by instincts or only by the past performance of funds. It would be best to make educated decisions by researching and reviewing factors such as market conditions, probable risks, financial conditions, and goals.

Instead of investing in a fund through a SIP that your colleague invests in, you should introspect on your factors to meet the investment purpose.

Key Takeaways

• SIPs help you develop a disciplined saving habit and fetch you good rewards.
• Investing in a SIP has many advantages, but you cannot oversee the underlying risks.
• When prepared to invest, you must look for a SIP that is planned according to your requirements, resources, and risk appetite.
• There is a SIP for each class of investors. Recognize your style and choose a SIP