Mutual Funds are investment vehicles that pool money from multiple investors to invest in various securities such as stocks, bonds, or a combination thereof, managed by professional Fund Managers. A Systematic Investment Plan (‘SIP’) is just one of the many methods of investing in a Mutual Fund scheme. In SIP a fixed amount (or as may be specified) is invested regularly into Mutual Funds, providing investors with disciplined and hassle free investing.
With SIP, because the amount invested in each instalment is fixed, you get more units when the NAV (Net Asset Value) of the Scheme, is low and you get less units when the NAV are high. This generally reduces the impact of market volatility in the long-term and is known as rupee cost averaging.
NAV stands for Net Asset Value. When you invest in any Mutual Fund Scheme, you are allotted units of that Scheme. NAV is net asset value of one unit in that Scheme. The NAV per unit is calculated by dividing the net assets of the scheme (Market/Fair Value of Investments + Current Assets - Current Liabilities and Provisions) by the number of units outstanding under that scheme.
Total number of units in the Mutual Fund scheme multiplied by the NAV is the AUM/Market Value of that Fund.
SIP top-up allows you to automatically increase your SIP amount (by Amount or specified %) at pre determined frequency. It aims to help your money to not only keep up with inflation but also grow in line with your increasing investing capacity over time without worrying about anything.
SWP is a feature offered by Mutual Funds that allows investors to regularly receive a predetermined amount of money at specified intervals as per the choice of the investors or the norms of the particular scheme, from their holdings in that Scheme. Unlike SIP (‘Systematic Investment Plan’), which involves regular investments, SWP involves periodic withdrawals and can take care of investor’s needs of regular cashflow.
It's an investment mode where you can regularly transfer a fixed amount of money from one Mutual Fund scheme to another Mutual Fund scheme within the same fund house. This strategy helps investors gradually move funds from a relatively safer asset class to a potentially higher return and risk asset class over time and vice versa, reducing the risk associated with timing the market.
There are many common mistakes that one must avoid to enjoy the full potential of SIPs. These include not having a goal or having an unrealistic goal, choosing the wrong scheme based on your risk profile and investment objective, not investing with discipline and stopping SIP when markets are volatile, not topping up your SIP, not reviewing your investments periodically and so on...
Compounding refers to benefit from earnings being reinvested to generate returns on original invested amount including returns generated over time, leading to potential exponential growth. Starting early, long-term investing and regular contributions are essential to fully benefit from the compounding effect.
Yes, SIP offers the option to pause or stop your SIP without any penal charges. However you may refer to the restriction on the number of times you can pause an SIP on the Mutual Funds's website .
Yes, the amount of your SIP can be easily changed. You have to login to your account -> Go to your portfolio -> select the scheme whose SIP amount you want to change -> Click on Modify SIP and follow the steps
Yes, the duration of your SIP can be easily changed. You have to login to your account -> Go to your portfolio -> select the scheme whose SIP duration you want to change -> Click on Modify SIP and follow the steps
Not all Mutual Fund schemes offer tax benefit. Investing in ELSS category and other notified Mutual Funds allow you a deduction upto Rs. 1,50,000 under old regime, from your gross total income under section 80C of the Income Tax Act, 1961
Exit load is a predetermined % that is applicable when you redeem your investments before a particular time as prescribed by the Fund. For example, if it is 1%, then 1%*No of units*NAV on date of redemption will get deducted from the redemption proceeds before it gets credited to your bank account.
SIP bounce can happen either if there is insufficient money in the bank account or you do not approve the payment manually on the SIP date . In such cases there will be no impact other than the SIP instalment being missed. However, some banks may also levy charges for not maintaining sufficient balance in the account.
To change your Bank A/C, you have to place the request for the cancellation of the existing SIP mandate and submit a fresh SIP mandate with the new bank details or else you can modify the SIP through online mode .
In order to start an SIP, refer these easy steps - 1. Get your KYC done 2. Determine your goal value in rupee terms 3. Decide your investment horizon 4. Choose a suitable fund/scheme with the help of your financial advisor 5. Set a frequency for your SIP 6. Decide your SIP amount 7. Choose the date of instalments for SIP 8. Submit your application physically or online and get started.
An individual Investor can complete KYC using online or offline mode:
For offline - Documents such as PAN/Aadhaar/ Passport size photo/ Cheque (name and a/c no. pre-printed) / or bank a/c statement (not older than three months) are required to be submitted at nearest ISC or RTA office.
For online - PAN/Aadhaar/Cheque/Signature are required to complete the KYC and investments can be made subsequently. To know more about KYC, please click hereThe minimum amount to start an SIP is Rs. 500. But a lot of AMCs also provide option of starting an SIP with Rs. 100 in most of their schemes subject to applicable restrictions in the respective Scheme Information Document.
The best starting scheme for your SIP for you will depend on your individual investment goals, risk tolerance, and investment horizon. Most of the hard work should be done in shortlisting and finalizing the fund/scheme.
The scheme of your choice cannot be changed while the SIP is ongoing. You will have to discontinue the current SIP and start afresh in the new scheme.
Yes. Achieving short-term goals within 1 to 3 years can be relatively easy with various financial products available today. SIPs instils disciplined investing habits, help save on interest costs, and prevent impulsive spending by keeping your finances within planned limits. When starting an SIP for short-term goals, it's crucial to select a scheme that aligns with your time horizon
While there is no direct answer to this question, depending on investor’s convenience. It may change based on investor’s age, investment horizon, risk-appetite and financial goals. Investors are advised to consult their financial advisor to understand right scheme and tenure of SIP for the same.
Yes, you can pay your first SIP instalment using your cheque if you are investing through offline mode. Your bank account number and name must be pre-printed on the cheque. The subsequent instalments will be paid by registering a valid OTM - One Time Mandate .
The amount gets auto-debited from your Bank A/c as per the instructions provided by you on SIP registration application.
Offline: First instalment through Cheque (along with proof of bank a/c) and subsequent instalments by registering an OTM (One Time Mandate).
Online: Standing Instruction/Biller, OTM and UPIYou can provide a copy of Bank Pass Book or updated a/c statement in case you are registering SIP via. offline mode .
For online mode, you can register eOTM, pay through UPI and through biller addition by providing correct bank a/c details.Yes, if you are a parent or legal guardian, DOB proof of child and relationship proof is to be provided. For investments, Bank A/c can be in the name of minor or parent/guardian. However, funds when redeemed, will only be credited to the bank a/c in the name of the minor/unit holder. You are advised to update the same before redeeming the funds.
No. For investments, Bank A/c can be in the name of minor or parent/guardian. However, funds when redeemed, will only be credited to the bank a/c in the name of the minor/unit holder. You are advised to update the same before redeeming the funds.
DOB proof of child and relationship proof is to be provided. For investments, Bank A/c can be in the name of minor or parent/guardian.
Individuals or Non-individuals like corporates, trusts, NRIs, NRs, etc. having valid KYC and Bank Account are eligible to invest .
Investors need to be KYC compliant to invest in any Mutual Fund.
For offline - Documents such as PAN/Aadhaar/ Passport size photo/ Cheque (name and a/c no. pre-printed) / or bank a/c statement alongwith application form.
For online - PAN/Aadhaar/Cheque/Signature are required to complete the KYC and investments can be made subsequently.Unless, the investor is the resident of Sikkim (where PEKRN* is acceptable) PAN is mandatory as a proof of identity for KYC validation.
(*PAN Exempted KYC Ref. No.)For Daily, Weekly and Monthly SIPs, the minimum duration is 6 instalments or subject to such other terms or minimum subscription amount as may be specified in respective Scheme Information Document. There is no maximum duration for SIP.
You can redeem your investments anytime (subject to exit load in case of early redemption as specified in respective Scheme Information Document) if you've invested into an open-ended scheme which doesn’t have minimum lock-in period specified. Schemes such as Tax Saver Funds (Equity Linked Savings Scheme (ELSS)), Retirement Savings Fund have minimum lock-in specified as specified in their respective Scheme Information Document . Your SIP will continue to exist until you cancel your SIP.
When your SIP tenure gets over, your funds will remain invested in the scheme till you redeem them. Your investment corpus will keep increasing or decreasing as per the performance of the scheme. Alternatively, you can re-start your SIP by submitting a fresh SIP application in the same scheme and folio.
No, all investments come with some amount of risk. To make it easier for the investors, each Mutual Fund scheme has its risk-o-meter as specified in their respective Scheme Information Document and fund’s website. Such Risk-o-meter indicates the risk associated with that particular scheme of a Mutual Fund.
Frankly, there is no single scheme that can give you the highest returns at all points in time. Every scheme will have it’s ups and downs. The best scheme for SIP for you will depend on your individual investment goals, risk tolerance and investment horizon. Most of the hard work should be done in shortlisting and finalizing the fund.
When markets are falling, all you need to do is stay invested as more units are purchased during this time. This will help with potentially enhancing the return when the markets recover.
Secondly, it is advised to diversify your investment across various schemes of Mutual Fund as this will protect your portfolio from downside risk and help you benefit from changing market conditions.Yes, you should do periodic monitoring of your investments. While no Fund will perform well in every period of time and market cycle, you should keep an eye on the performance and track record & modify your portfolio according to your financial goals
Yes, over the long term SIPs can be considered to be an investor's best friend. Flexible investment amounts, hassle free investing, freedom from timing the market are some of the benefits that SIPs offer.
You can see your investment details on the website of the Mutual Fund you have invested in. If you are investing through an online platform, your details will be available there as well.
The account statement is mailed to you monthly on your registered email ID.
Alternatively, you can download your account statement through the website of the AMC/or from such other platform (such as fintechs) in whose scheme you have invested. You can also get a consolidated statement from CAMS or Karvy website.First time investors can attach, along with the mutual fund application form, an SIP Enrolment form. The SIP enrollment form is usually submitted along with an auto-debit form. First time resident individual investors with mode of holding as single, can start directly create a folio and start investing online
Existing investors can fill the SIP enrollment form mentioning the folio number and submit it along with the auto-debit form. If you are an existing investor with online transaction facility, you can logon to www.hdfcfund.com and apply for an SIP.