An SIP or Systematic Investment Plan is where you invest a regular sum every month into a mutual fund instead of a lump sum payment. Once you’ve understood the meaning of SIP investment, you can decide whether this mode of mutual fund investment is suitable for you. This method helps you plan out your finances through periodic investments. Timely investments will not only help you improve your financial condition but also provide a safety net in times of need. You can also use these investments as collateral to avail of loans during financial emergencies. For instance, Bajaj Finserv offers you Loan Against Shares with rapid principal approval.

Types of SIPs

There are several types of SIP investments available in the market. The best SIP investment plan would be a combination of funds, such as equity, income, and gold-based funds. Selecting the best mutual funds for SIP investments will ensure that you have a diverse and lucrative investment portfolio.

Debt-based income funds place your money in debt-based instruments. These type of funds ensure average but safe returns. They are great when you’re looking for short-term or medium-term investments.

Equity-based balanced funds are ideal if your investment period is between 3 to 5 years. They are considered a medium to long-term investment because they are balanced funds that allow your money into both debt and equity securities.

Equity-based growth funds are tailor-made for you if you are a risk-taking, long-term investor, with a plan to invest for over 5 years. As these funds are based on stocks, the risks are higher. However, the returns that these funds generate are also predictably high.

Debt-based ultra-short term funds offer quick earnings on your investment. Choose this type of fund if you intend to invest for short periods (between 6 months and 2 years).

If you prefer alternatives to SIPs in mutual funds, you can always invest in Fixed Deposits provided by several lenders like Bajaj Finserv, which provide enhanced security for your investments.

Why Choose a SIP?

Now that you have a clear idea of the meaning of SIP investment, the next step for you is to acquaint yourself with the benefits that such investment packages offer. An SIP helps you maintain financial discipline by accustoming you to saving a fixed amount of your income each month. Another reason to invest in SIPs is the simplicity they offer—all you have to do is provide cheques to the investment management firms, who will take care of your investment portfolio. SIPs are also convenient and easy for you to handle as the average cost per share falls when you invest on a monthly basis, as opposed to investing in a single transaction. Also, with an SIP, the period of compounding is extended, which guarantees you higher returns.

If investing in an SIP is what you are looking for, financiers like Bajaj Finserv offer you different types of mutual fund investments with low transaction costs and transparent evaluations.

Checklist for an SIP

Some of the documents required for SIP investment include proofs of address and identity, a copy of your passport and PAN card, and a cancelled blank cheque. You will also need to submit the completed application form. You can make an online SIP investment once all the investment firm’s KYC rules are adhered to and your documents are in place. While the procedure for SIP investment is simple, it can take up to 21 days to process all your forms and documents.

Overall, SIPs offer you an investment avenue that helps gather high returns while retaining a significant amount of flexibility.

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