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Systematic Investment Plans, are the most flexible and the most preferred way to invest in mutual funds especially when planning to invest for the long term. It allows investors to put a small, but the fixed amount, periodically, usually once every month.

If I say that apart from Regular SIP’s, there are some more efficient features that your SIP offers you, won’t you be interested to know about it!

Let us know about the other modes of systematic investment that investors can opt for.

Trigger Based SIP’s…….

This mode of SIP’s offers it, investors, to allocate funds automatically in their scheme, at pre-defined triggers. These triggers might be related to the movement of any benchmark index or any change in the value of your investment.

Usually what happens, when the equity market declines, investors get reluctant towards investing more at this time in their fund, as they feel their investment will get in loss, but the fact is that investing in a market decline may help to get better returns in the long run. However, for investors who have automated SIP’s, things will be easier for them to handle emotionally. Also, their SIP’s will help them get more units when the market declines.

Some of the fund houses like Edelweiss MF, FundsIndia, and PGIM MF offer such SIPs with slight variations. For example, with the ‘Power SIP’ of Edelweiss MF, you can specify the fall in the Nifty – 0.5 percent, 1 percent, or 2 percent. Once such a fall happens, the SIP amount will get debited from your bank account.

Other fund houses choose other ways to trigger your SIP installments like they will increase your SIP installment if your overall investment value goes down and reduce them if the corpus appreciates.

While you opt for trigger SIP’s, experts advise, choose schemes from fund houses whose method to trigger your SIP amount is understandable.

They also say that you won’t experience the benefit of trigger SIP when the market decline, at this time you will only end up adding a greater number of units to your portfolio. Only when equity markets recover will you get the advantage of these trigger-based SIPs.

Top-Up SIP or Step-Up SIP………..

Many fund houses allow you to increase your SIP amount by a fixed percentage at fixed intervals, mostly annually. You always have an option to increase the amount of SIP periodically with the top-up or step-up facility in an ongoing SIP.

With time we all get a raise in salary and with raise, we get two options to choose from either we can increase our spending or saving. For a secure future, one must choose wisely and increase their saving or say investment.

The question here is how do you do that in an ongoing SIP? So, let us know how you do it.

How to step up your SIP?

There is two way in which you can do so –

• After deciding how must extra you want to invest you can start afresh SIP, either in the same fund or can start investing in new funds in the same folio. Even you start investing in the same fund your new investment won’t get clubbed with the old one.
• Or, you can use a step-up feature of SIP, with this your contribution will increase automatically according to the pre-decided amount and pre-decided periodicity. This feature covers your investment according to the increase in your disposable income. This top-up option must be specified by the investor while enrolling for the SIP facility.

You can contact your fund manager or can visit Ashutosh Securities Pvt. Ltd. for any assistance in the step-up of SIP.

SIP’s That Give Insurance Cover……….

There are some fund houses that not only give you a return on your SIP investment in mutual funds but also offer you, life insurance but with certain conditions.

For example, PGIM MF offers a cover of 20 times your SIP monthly investment in the first year, 75 times from the second year, and 120 times from the third year.

So, if you run a SIP of Rs 10,000, you will get a cover of Rs 2 lakh in the first year, Rs 7.5 lakh in the second year, and Rs 12 lakh from the third year.

ICICI Prudential MF, Aditya Birla Sun Life MF, and Nippon India MF also offer these covers in mildly varying formats. With these fund houses, if SIPs are stopped after three years, the cover will adjust to the market value of the investment.

Basically, if you want life insurance cover along with efficient returns from your investment, it is a must for you to carry your SIP investment for at least three years. In case if you discontinue your SIP before a period of three years with the fund houses mentioned above, the cover will cease to exist. Any switches, partial or full redemption, before three years, will also lead to the cancellation of your cover.

Investors with large SIP investments and the ability to stay for three years without withdrawals can get good coverage from these plans. However, for retail investors, it is advised that you must depend only on life insurance cover from your SIP’s, instead, you need to opt for a separate term cover to get yourself adequately insured.

Keep reading our articles for more updates on finance and investment!!

For any kind of query you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).