Some FAQs On Systematic Investment Plan

Everyone plans to save money to look after retirement and other additional expenses for the future. It is essential to accumulate the amount to fulfil your financial dreams and live peacefully. You can approach different fund houses and financial advisors for help and see your investment grow over time.

Investment in Mutual Funds through a Systematic Investment Plan is ideal as you can track and arrange your finances accordingly. However, you also invest a lump sum through the Mutual Fund app. People are curious to know more about it and have some common questions in place:

What is the plan?

The Mutual Fund Investment involves an organised way of contribution. Many times, you may not have a large sum to invest. When you set up a systematic investment, your account gets debited for a fixed amount monthly towards a fund of your choice. Over time, your assets accumulate and keep growing.

Is it safe?

Investing in Debt Mutual Funds is safe. If you invest in a lump sum, you pay a high price for the fund, depending on the market condition. Invest in these funds when the markets are not too high to avoid paying too much. You need to know the correct timing for the investment. But when investing in small amounts every month, the price will be high and low in some months. If you consider for the long term, the price paid is an average of high and low.

Are returns taxable?

The returns from Equity Funds have no tax on them if redeemed after a year of investment. If you redeem before that period, you pay a tax of 15% on your capital gains.

On the other hand, Debt Funds attract a tax of 20% with indexation benefits if you redeem after three years of investment. You pay tax according to your IT slab if you redeem before that stage.

How to save tax?

If you use systematic plans to invest in tax-saving ELSS Mutual Funds, you save on tax, with claim deductions of up to Rs. 1.5 lakh under Section 80C. Ensure the total of all your investments does not exceed Rs. 1.5 lakh.

Is an increase or decrease of investment possible?

The procedure to do so is lengthy. But you can start a new investment plan in the same fund with an increased amount. For example, if your SIP is Rs. 10,000 monthly and you want to increase it to Rs. 12,000 per month, start a new plan in the same fund.

How to invest online?

You can start investing your money in Mutual Funds online by signing up on the fund house website, uploading the necessary documents like PAN card, address proof, and bank statements, and selecting the fund for investment.

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