Micro SIP (Systematic Investment Plan): beneficial small investment plan
Many times, people avoid making investment as they do not have lump sum amount to invest in. but now you can earn higher profits and returns even with smaller investments. Are you also one of those who want to make investment but have small amount of money for investment? Then you must invest in Micro Systematic Investment Plan (SIP) to earn maximum profits with your small savings.
SIP has permission to invest in equity and date fund but not in Exchange Traded Fund (ETF). Thus ETF prepares a Gold Fund in ETF for SIP and invest in Gold ETF. Thus it works like a feeder fund. What is Systematic Investment Plan (SIP)
Systeamtic Investment Plan (SIP) is a scheme offered by mutual fund house though which a small amount is invested in fund on a regular basis. Investor invests a fixed amount in selected mutual fund on a predetermined monthly or quarterly time interval. Fund manager use this amount to purchase fund units on present NAV (price per unit). There can be a lock-in period in SIP. This means that you cannot withdraw your capital without payment of penalty or exit load. Who should invest in Micro SIP (Systematic Investment Plan)
The room of Systematic Investment Plan (SIP) is beneficial for those who are willing to invest in mutual fund but don't have lump sum amount for investment. Minimum amount to invest in SIP is Rs. 100. but there are some other Systematic Investment Plans in which you can invest less than Rs. 100. SIP helps you to put a habit of savings. You get the better results of Systematic Investment Plan after 5-8 years because a market cycle completed during this period. this helps you to earn more profits. This type of investment is beneficial for those who can deposit a small amount of money on monthly basis for many years. Is Systematic Investment Plan (SIP) better than lump sum investment?
Systematic Investment Plan (SIP) is better than lump sum investment as investors get security from fluctuations in the market. When there is a bear market, then you get more units through SIP because NAV is at its lowest level during that period, and vice-versa. Thus it brings a balanced average NAV of units purchased at times of bear and bull market. Thus SIP is considered to be less risky. Mostly, you get facility of waived exit load in SIP. On the other hand, high return could not be received from Systematic Investment Plan (SIP) at times of bull market due to low invested amount. Lump sum is based on principle of 'high risk-high return'.Which funds offer Systematic Investment Plan (SIP)?
Equity fund, date fund or sectoral funds allow you to invest in all categories through route of Systematic Investment Plan (SIP). But these plans cannot be used in ETF. Thus mutual fund offers has found a way to resolve this matter. Mutual fund house raises gold fund and invest in gold ETF. Thus it works like a feeder fund.