SIP Update: There are not just one or two but 5 types of SIPs, let us know how they work...
Whenever it comes to investment, you must have often heard people suggesting that you should start SIP. SIP means Systematic Investment Plan. Under this, you invest a fixed amount every month in a mutual fund. However, very few people know that there are many types of SIP. Let us know how many types of SIP are there and how it works.
1- Regular SIP
The first is regular SIP, under which you invest a fixed amount every month. You can do this on a monthly, quarterly, or half-yearly basis. You have the option to choose the date yourself.
2- Step-up SIP
Under this SIP, you get the facility to increase the SIP in a fixed period. For example, you can increase the SIP amount on an annual basis. Suppose you do a SIP of Rs 10 thousand every month, then under this, you can increase it every year by 10 percent or 5 percent, whatever rate you want. Under this, your investment keeps increasing automatically.
3- Flexible SIP
After this comes the number of Flexible SIPs, under which you can make some changes in your SIP. For example, you can increase or decrease the SIP amount. However, if you want to do something like this, then you will have to inform your fund house about a week before the SIP deduction date.
4- Trigger SIP
This is the most interesting SIP. In this, you can decide when the SIP will be triggered on the basis of money, time, and valuation. You can set conditions for this in advance. For example, if we talk on the basis of price, then you can set a condition that when the NAV exceeds Rs 1000, the trigger SIP will start. At the same time, you can also decide that if the NAV becomes less than Rs 1000, then start investing some of your extra money in SIP. Similarly, trigger SIP can also be planned on the basis of time and valuation.
5- SIP with Insurance
This is the SIP on which you also get term insurance cover. This may happen in different ways in different fund houses. Under this, some provide insurance cover up to 10 times the amount of the first SIP, which increases later. This feature is available only in equity mutual funds and there is a capping on it, say Rs 50 lakh.
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