Systematic Investment Plan (SIP) means the specific time bound mutual fund schemes that require a fixed amount of investment over a stipulated period of time. Much like any other investment plan, SIP too needs comparison and understanding. The Best SIP Plans are those that suite ones need and requirements. Here are some key requirements that often make the best SIP plans:
- SIPs are of various types of funding. One individual firm or company should choose the fund types correctly according to their needs. Systematic Investment Plans, except in cases of Liquid funds, cash funds and floating rate debt funds, offer SIP schemes. All types of Equity Funds, Debt Funds and balanced funds are included in this category.
- Layman, especially the individual investors fail to understand the day to day market conditions and invest on shares in a daily basis. SIP is recommended for those investors who want to buy shares without daily involvement in the hassles of share trading.
- SIP helps in decreasing the average cost per unit of investment. Which means even if you incur a loss in today’s market and get a profit in tomorrow’s shares the profit loss ratio gets adjusted and somehow nullified to give the investor a lump sum profit after a desired time span.
- Systematic Investment Plan also provides tax benefits for the investors. If you invest in the scheme for ten months or the minimum number of months whichever is lower, then Capital Gain Taxes are exempted. This is a very attractive point for most investors in India who look for tax exemptions and benefits.
Mutual Fund Systematic Investment Plan is thus a good way to invest in stocks, dividends and mutual funds. A broker or investment bank can have the authority to set up an account for an individual, firm or company solely for this purpose directly with the companies that the investor chooses or is advised to invest in. The SIP plans need to be compared via experts or online, according to the requirement of the investors to provide them the best one for themselves.
