Systematic Investment Plan – Meaning, Types & Working

Are you looking to know what SIP actually means? Here is your answer to the confusion. SIP is the investment of a particular sum of money in regular intervals; usually it happens monthly or weekly or on quarterly basis. It is the best way to invest in mutual funds. It is also the easiest way to invest and save your money. A particular sum of money would be automatically debited from the bank account that you are holding or the one you had provided. You would get allotted to a certain sum of units and it would take place according to the present market value.

It is the most disciplined way to invest in a mutual fund. It looks into the matter that you develop a sense of saving so that it would help you to achieve future goals related to long term or short term. Systematic Investment Plan is known for its flexibility which had made investors to either invest more amount of money or to invest some fewer amounts. You could even leave the plan and stop to invest in that without any specific time period. SIP is excellent for the new investors. It is also the best for the ones who are not well equipped with the financial ups and downs of the market.

Types of systematic investment plan
There are only four types of systematic investment plans. These are top-up SIP, flexible SIP, perpetual SIP and trigger SIP.

  1. Top-up SIP – It is that plan which provides you with the option of increasing the invested sum of money on a periodical basis.
  2. Flexible SIP – It is the type of SIP where you could increase or decrease the amount of investment. This also helps you to skip some amounts to be paid when you do not have the amount with you. 
  3. Perpetual SIP – It is the type of SIP where you do not have to mention the ending date. SIP is generally for a particular period of time such as 5 years, 1 year or 3 years. It is a redeemable plan.
  4. Trigger SIP - It is the type of SIP which is meant for the beginners or people who do not have the knowledge of the present ups and downs of the market.

Each time you invest an amount in SIP, you are provided with the best plans of SIP in India.