Investment through SIP: Benefits and Myths regarding itBest SIP Investment Plan 2017: Everyone wishes to save for future. For this person choose different modes of investments. Here we will discuss on Top SIP Investment Plans 2017. It is not necessary that to get big amount one has to invest hugely. By investing more than one's capacity can create the financial burden. Small investments done at regular intervals can also give larger benefits. This is possible by investing in mutual funds.
Bank gives the facility of regular investment by recurring accounts similarly mutual funds give the chance of regular investment through Systematic Investment Plan (SIP). First of all, an investor has to arrange money for investment. Then one has to decide what amount one has to invest and for how much duration. This is the one-time process. Thereafter mutual fund itself withdraws money from the investor's account.
Benefits of SIP
- One can start investment from as low as Rs. 500.
- There in multiple dates available for investment.
- There is no need to invest according to the market condition. This is really useful when there is greater ups and downs in the share market.
However with all such benefits, people still hesitate in investing in Systematic Investment Plan due to lots of myths. Let us now talk about various myths that people have about SIP.
Myth 1: SIP is a type of equity fundThis is not a type of equity fund. On the other hand, it is a kind of option given by mutual fund wherein one can invest according to ones choice. In such way we do not invest in Systematic Investment Plan but invest in different other things with the help of SIP.
Myth 2: Performance of SIP depends on related schemeBefore choosing fund for your SIP one comes to know what risk one can afford and about past and present performance of the fund house.
Myth 3: SIP is for small investorsSIP is for those who wants to invest but do not have enough income for the same. But large funds can also be invested in Systematic Investment Plan. Whether one invests Rs. 10000 or Rs. 1,00,000 in SIP the return received is the same. Only depending on the money and duration for which it is invested the end fund is different.
Myth 4: There is no loss in SIPThere is no guarantee of return in SIP. One can incur loss too. To earn money your selling should be more than the price you bought it. In equity mutual fund, success of it depends on whether on long term there will be profit in equity market. For example if you have invested through SIP and bought units worth Rs. 110, then to earn profit they should be sold at price greater than Rs. 110. In case this do not happens one incurs loss.
Myth 5: SIP gives less interestThis investment is done in different intervals. Hence the best way to calculate the return of SIP is through Internal Rate of Return (IRR). You can know about IRR through the fact sheet of mutual fund.
It is really a good mode of investment in the equity market. This is because it gives lots of benefits and gives an option of investment according to one's choice. One can increase funds yearly by increasing investment every year. Kotak mutual fund gives one such option by the name of Mutual Fund SIP Booster. For example, if your SIP amount is Rs. 5000 every month by increasing Rs. 1000 you can increase it to Rs. 6000 every month.
So invest in Systematic Investment Plan and increase your funds. This is easy and gives good returns. So what are you waiting for? Find the best SIP and invest.
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