Suppose you have started a SIP in 2006 for 10 years, i.e. The equity markets go up and down and won’t be at the same level every month. A SIP allows you to invest at different levels of the market and benefit from rupee cost averaging.You can extend the whole duration of investment or you can customize from monthly duration to quarter duration to yearly durations. This enables you to have a nice amount of capital appreciation. The returns on the returns get compounded each time and you get a very fair interest simultaneously. Another benefit you get of SIP is that you can re-invest the returns you get from the investments.But remember, you should not do this every time because of it volatiles the basic criteria of SIP investment. Not only this, you can skip investing your money in between for any month.You can be asked to bear a very less percentage of exit loads in exchange for it, but that’s OK because it will not harm your money in a drastic way. You can withdraw a part of earned income before the arrival of the lock-n period also, in case you have to face some emergency issue.The successive plans will get terminated in successive durations. SIP follows the First-in-First-Out (FIFO) rule, wherein the SIP plan which you had opened very first, will be terminated first or you can say, it arrived at its maturity period first.SIP can be started with a minimum amount of Rs 500.Anyone from any financial class can open a SIP for him.You can open multiple SIPs on various durations. How to choose best mutual fund for long term?.Retirement Planning Through Mutual Fund.He has permission to even extend the period after reaching the prior duration. The investor chooses the duration plan himself, say for 1 year, or 3 years or anything. The duration for which the SIP continues is also pre-decided. How does SIP Plan work? – The amount of money to be invested is decided by the investor himself, after considering his capacity. The regularity for investing money can be done either every month or every quarter or even yearly basis also. Through SIP, the investor has to invest a fixed amount of money in a regular way in Mutual Fund. SIP is considered the much better way to accumulate your wealth as per your suitable customized features.
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