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What is an Systematic Investment Plan?
An SIP, or Systematic Investment Plan, is an investment method by which mutual funds allow their investors to invest in a disciplined / systematic manner. By using the SIP facility, an investor can invest a fixed amount of money at predetermined intervals in a mutual fund scheme. The instalment amount can be as low as Rs.100, while the pre-defined SIP intervals can be daily, weekly, monthly, or yearly. Investing in SIP can be a time-bound manner and may provide an opportunity for investors to build their investment over the long term due to the power of compounding and average costing.
| Frequency under SIP Facility | Minimum Installments | Minimum SIP amount |
|---|---|---|
| Daily | 6 Installments | Rs. 100/- and in multiple of Re. 1/- |
| Weekly | 6 Installments | Rs. 100/- and in multiple of Re. 1/- |
| Monthly | 6 Installments | Rs. 100/- and in multiple of Re. 1/- |
| Yearly | 3 Installments | Rs. 12,000/- and in multiple of Re. 1/- |
Benefits and Features of SIP
Disciplined
Rather than timing the market, Investors can create a disciplined and organised investing process using a systematic investment plan. SIP allows investors to invest a fixed amount at regular intervals. The SIPs can be set up on a daily, weekly, monthly, or yearly basis depending on the scheme.
Rupee Cost Averaging
The price of Axis SIP mutual fund investments may vary daily due to changes in the market conditions. As the invested amount in SIP is fixed, an investor can purchase more units when a market share price is low and fewer units when a market share price is high, taking advantage of rupee cost averaging.
Convenience
SIPs offer a hassle-free mode of investment. You can start an SIP online in a few easy steps. Once the SIP is set up, the investment amount is automatically deducted from your bank account at predetermined intervals. This eliminates the need to remember investment dates, thus making the process efficient and easy to manage
Provides Flexibility of Investment Amount
While the minimum investment limit for Axis SIP investments is Rs.100, the maximum investment limit can vary depending on the scheme. For instance, Axis Small Cap Fund has an investment limit of Rs.1 Crore. Investors have the flexibility to invest in more than one SIP scheme at the same time and may adjust the investment amount according to their requirements.
Flexible Tenure
The Axis SIP mutual fund schemes allow investors to choose the term of investment to suit their own needs and circumstances. It offers investors the flexibility to adjust the term period of their SIP investments based on their investment targets or other requirements.
Power of Compounding
The power of compounding is one of the key advantages of SIP. Compounding means earning interest on the interest. As you invest regularly over a long period, the returns from an SIP investment may also accumulate over time.
Small Payments
SIP allows investors to invest as little as Rs. 100 in mutual fund SIP; the maximum amount remains uncapped.
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SIP Calculator
Find the future value of your monthly/quarterly SIP investment.
You will have to invest ₹NaN per month to achieve your goal.
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Disclaimer: The calculator alone is not sufficient and shouldn't be used for the development or implementation of an investment strategy. This tool is created to explain basic financial / investment related concepts to investors. The tool is created for helping the investor take an informed decision and is not an investment process in itself. Mutual Fund does not provide guaranteed returns. Investors are advised to seek professional advice from financial, tax and legal advisor before investing
Power of starting SIP early
Starting an SIP early in one’s career can be a strategic move. It allows the individual to accumulate a larger corpus over time due to the power of compounding. This approach also encourages disciplined investing, as a fixed amount is invested at regular intervals. Moreover, it can help in mitigating the impact of market volatility, as more units are purchased when prices are low and fewer units when prices are high. This strategy, known as rupee cost averaging, can be effective over the long term. Remember, the key to successful investing is not timing the market, but time spent in the market.
Let's consider an example of two friends, Amit and Ravi. Both were software engineers and earned a decent salary.
Amit started investing in the Sensex index at the age of 25 (04-04-1979) till 01-02-2024. Each month, he invested ₹5000, making a total investment of ₹26,80,000. By the time he stopped investing, the return he received was a staggering ₹ 20,75,17,690.
On the other hand, Ravi started investing at the age of 35 (03-04-1989) till 01-02-2024 in the Sensex index. He made the same monthly investment as Amit, but his total investment was ₹20,80,000. The return he received was ₹3,16,41,127.
Even though the difference in their total investment was just ₹6,00,000, the difference in their returns was a massive ₹ 17,58,76,563! This demonstrates the power of starting SIP early. It wasn't about timing the market, but time spent in the market. The earlier they started, the more time their investments had to grow. This example clearly shows that the power of compounding can lead to significant wealth creation over the long term. The key is to start investing early and stay invested.
Start your SIP today and take advantage of the potential benefits of compounding.
Goal based SIP investment
Goal-based SIP investment is a strategic approach where an individual aligns their investment with specific financial objectives. Whether it’s buying a house, funding higher education, or planning for retirement, goal-based investing can be an effective strategy. By determining the amount needed and the time horizon for each goal, one can decide the amount to be invested in the SIP. This method encourages disciplined and regular investing, which may contribute to an increase in the value of your investment over time. However, it’s important to note that all investments carry a level of risk and the value of investments can fluctuate. Always seek advice from a financial advisor before making investment decisions.
In essence, our Axis Mutual fund goal planning and tracking feature is not just the enhancement, it is a transformative shift towards more strategic, informed, tailored tools that help you towards holistic investment.
Frequently asked questions
What is SIP in Mutual Funds?
A Systematic Investment Plan (SIP) is a method of investing in mutual funds that allows you to invest a fixed amount regularly, at frequent intervals. This disciplined approach helps accumulate a substantial corpus for the future. Mutual fund schemes are investment products that pool money from many investors to invest in a diversified portfolio of stocks, bonds, and other securities basis their asset allocations. SIP is not a type of mutual fund scheme, but a way to invest in them.
What is power of compounding?
What are the benefits of SIP investment?
Why SIP is important?
How does SIP work?
What happens if I miss an SIP instalment?
What is Top-up / Step-up SIP?
What is the difference between Top-up SIP/Step-up and SIP?
What is the minimum amount to invest in SIP?
Are SIP safe?
What are the types of SIP plans?
What is SIP calculator?
How much can I invest in SIP?
What is the maximum tenure of SIP?
Do SIPs allow only equity mutual fund investments?
Can I pause my investments in SIP?
Can I do a long term SIP investment?
Can I buy SIP plan online?
What is SIP in Mutual Funds?
A Systematic Investment Plan (SIP) is a method of investing in mutual funds that allows you to invest a fixed amount regularly, at frequent intervals. This disciplined approach helps accumulate a substantial corpus for the future. Mutual fund schemes are investment products that pool money from many investors to invest in a diversified portfolio of stocks, bonds, and other securities basis their asset allocations. SIP is not a type of mutual fund scheme, but a way to invest in them.
What is power of compounding?
The power of compounding refers to the potential for your investment to increase in value as earnings, both capital gains and interest, accumulate. This could potentially result in an increase / decrease in the value of your investment over time varying basis the market scenarios.
What are the benefits of SIP investment?
Power of compounding, Rupee cost averaging, flexibility and disciplined investing are some of the benefits of SIP investment.
Why SIP is important?
SIP is important as it promotes disciplined investing and mitigates the impact of market volatility.
How does SIP work?
The SIP method involves investing a fixed amount at a defined time interval. The investor can invest hassle-free and without having to time the market.
What happens if I miss an SIP instalment?
If you miss an instalment of your SIP, there is no penalty; however, if you miss three consecutive instalments, your SIP will be cancelled.
What is Top-up / Step-up SIP?
The top-up SIP facility allows investors to increase SIP installations by a fixed amount at predetermined intervals. For example, let's say you start a Step-up SIP with an initial monthly investment of ₹5000 and decide to increase it by ₹1000 every year. In the first year, your monthly SIP would be ₹5000. In the second year, it would increase to ₹6000 per month, in the third year to ₹7000 per month, and so on. This allows you to gradually increase your investment as your income grows.
What is the difference between Top-up SIP/Step-up and SIP?
A SIP involves regular fixed investments, while a Step-up SIP allows increasing the investment amount periodically. This can potentially lead to a larger corpus. However, consult a financial advisor as investments can fluctuate.
What is the minimum amount to invest in SIP?
The minimum amount to invest in an SIP can vary depending on the mutual fund house, but it's often as low as ₹100.
Are SIP safe?
Systematic Investment Plans (SIPs) are not guaranteed to be safe as they depend on market performance. However, features like rupee cost averaging can help mitigate risks. Like all investments, they should be chosen carefully.
What are the types of SIP plans?
There are several types of SIPs available:
1. Regular SIP: This is the most common type where you invest a fixed amount in a mutual fund scheme regularly at fixed intervals.2. Top-up SIP: This type allows you to increase the SIP amount periodically.
What is SIP calculator?
An SIP calculator is a tool that helps investor to estimate their expected returns of investing through SIP. However, SIP Calculators are just a tool, the actual returns may vary.
How much can I invest in SIP?
The amount you can invest in an SIP can vary widely, depending on your financial goals and capacity. There’s often no upper limit.
What is the maximum tenure of SIP?
The maximum tenure of an SIP can vary, but it can often be as long as 10 to 15 years, or even more. However, the actual tenure depends on the mutual fund house and the investor’s financial goals.
Do SIPs allow only equity mutual fund investments?
No, SIPs are not limited to equity mutual funds. They can also be used for investing in other types of mutual funds like debt funds, balanced funds, etc. However, the choice of fund should align with your financial goals and risk tolerance.
Can I pause my investments in SIP?
Yes, many mutual fund houses allow investors to pause their SIP investments for a certain period. However, the specific terms and conditions can vary. The Investor may refer to the scheme information document for information in this regard.
Can I do a long term SIP investment?
Yes, SIPs can be used for long-term investments for up to 40 years w.e.f. 01/04/2024. The duration of the SIP can be chosen based on your financial goals.
Can I buy SIP plan online?
Yes, many mutual fund houses and financial platforms allow you to buy SIP plans online.
Disclaimer:
Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to ₹ 1 Lakh). Mutual Fund Trustee Ltd.
Investment Manager: Axis Asset Management Co. Ltd. (the AMC).Risk Factors: Axis Bank Ltd. is not liable or responsible for any loss or shortfall resulting from the operation of the scheme.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
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Mutual fund investments are subject to market risks, read all scheme related documents carefully.
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