SIP (Systematic Investment Plan) The number of people investing in mutual funds through this has increased rapidly in the last few years. However, despite this, most investors know only 1 type of SIP. That is monthly SIP. But do you know that there are 6 types of SIP? If not then it would be beneficial to know. You can get higher returns on mutual fund investments by knowing the types of SIP. At the same time, it is not wise to sip without understanding. Therefore today we are telling you about 6 types of SIP.
Regular SIP
Most of the investors invest through regular SIP. In this, investors invest a fixed amount every month. You can choose to invest on monthly, 2 month, quarterly or half yearly basis. In this, the amount is deducted from the account on a fixed date.
(Perpetual) Perpetual SIP
As the name suggests, there is no tenure in perpetual SIP. This means that investors can continue this SIP as long as they want. Practically investors go for a very long term when starting their SIPs. You can stop SIP whenever you want. One advantage of such SIPs is that you get to benefit from the power of long-term compounding for your investments. Generally, the longest period to continue SIP is 40 years.
Flexible SIP
Here, investors can change their investment amount based on a pre-decided formula. The investor can invest less amount when the market is high and more amount when the market is down. However, you must invest a minimum, pre-determined amount regularly under all circumstances.
trigger sip
Triggered SIPs are triggered by specific market movements. For example, you can set up a SIP every time the stock market falls by 5% in a day. Such SIPs help you time the market and take best advantage of market trends. However, to use triggered SIP to your advantage, you must have a deep understanding of the stock market.
Top-up SIP
In top-up SIP, you can increase your SIP installment amount by a fixed amount depending on your financial situation. Whenever your income increases or you get a job promotion or salary hike, you can use this opportunity to increase your SIP amount by going for top-up of additional SIP amount depending on your affordability.
Insurance SIP (SIP with Insurance)
In this SIP, investors also get insurance protection along with investment. That means investors get term insurance cover. Under this SIP, many mutual fund houses provide insurance cover to the investor up to 10 times the amount of the first SIP. The cover increases later.
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