A quick guide on SIPs

Often, investors do not have large sums to invest. This lack causes hindrance in their investment journey. This is when a Systematic Investment Plan comes to their aid. It is a type of scheme that operates on a simplistic investment approach. Through a SIP, a fixed amount gets debited from your account every month. The amount is finalised by you and can be as little as Rs. 500. Hence, this scheme is excellent for first-time investors.

However, there are certain things to know about such schemes. It lets you decide whether it meets your requirements. Here are a few of them:


A Systematic Investment Plan is an entirely safe investment avenue. It lets you invest a small amount of money each month. This way, you avoid paying an overvalued price for Mutual Funds.  Also, the average high and low amount gets determined by your investment duration. This process is rupee cost averaging. It lets you estimate the returns.


Unlike other Fixed Deposit schemes, you may discontinue the SIP at any time. You get two options after doing so: redeem your money from the fun or let it remain in the fund. These options also make the scheme highly flexible.


If you invest in an ELSS or Equity-Linked Saving Scheme through this scheme, you save on taxes. You can even claim tax deductions up to Rs. 1 lakh under section 80C of the Income Tax Act of India.

Amount reduction

Investors may change their fixed deposit amounts in this type of Mutual Fund Investment. They have the option of using a SIP Calculator to compute the new amount. But bear in mind that the investment amount modification entails a somewhat lengthy process. If you wish to change the amount, apply for another SIP. Doing this will save you a lot of time.


These schemes are easily accessible to investors. Many online banking portals offer them based on your market requirements. You just need to upload some necessary documents along with a bank statement. After this, you must invest in a Mutual Fund to start your SIP. Before beginning this process, however, ensure that you choose a reliable banking portal. That way, you enjoy a seamless application experience.

Exit load

The exit load of such plans depends entirely on the concerned Mutual Funds. If the funds specify an exit load, the same will apply to your SIP. Generally, Equity Funds have an exit load of 1% if you redeem them within a year of investing. This load turns to nil if you redeem it after completing a year. Investors typically calculate this percentage based on the value that is redeemed. But you could contact your fund house for proper assistance.


SIPs are the perfect options for those who do not have large sums to invest. They facilitate wealth building and empower you to start your investment journey monetary despite limitations.

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