1. What is SIP?

A Systematic Investment Plan (SIP) is an investment avenue that allows investors to invest money in mutual funds through regular investments at fixed intervals. The amount can be as low as INR 500 and the investor decides the frequency.

2. Why should I invest in a SIP?

There are various benefits of investing in an SIP. It inculcates a disciplined approach to your savings and allows you to build a substantial amount of wealth in a slow and steady manner. You do not have to worry about picking the right assets, as this is the responsibility of the fund manager. All you need to do is to be consistent in your investing pattern. Through principles such as ‘Rupee Cost Averaging’ and ’The Power of Compounding,’ the SIP is poised to deliver high potential returns in the long-run.

3. What are the eligibility criteria for the SIP?

Anyone above the age of 18 whether an Indian or an NRI can invest in mutual funds through the SIP route. However, you need to have all the necessary identity proofs in place and a bank account with net banking facility activated. You can also pay the SIP amount through post-dated checks.

4. What is the frequency of SIP investment?

The frequency of the SIP investment totally depends on you. It can be weekly, monthly, quarterly, or annually. You need to decide a frequency based on your comfort level and be consistent in investing the amount.

5. How much should I invest and what should be my tenure?

You can start an online SIP investment with an amount as low as INR 500. The tenure of your investments needs to be based on your financial goals. You can use tools like the online SIP calculator, which will help you to understand the quantum of accumulated wealth under varying investment amounts, tenure, and frequency of investment. Once you get an idea, it will be easier for you to make a decision about the tenure of investment.

6. Can SIP returns be negative?

SIP returns can be negative in the short-term. The returns on SIP depend upon the NAV of the fund, which can fluctuate based on the market conditions. However, if you continue to invest over a longer period, the SIP returns are smoothened out.You do get positive returns due to ‘Rupee Cost Averaging’ and ’The Power of Compounding.’

7. What is the procedure to modify or cancel my SIP?

You can modify or cancel your SIP mandate by sending a modification/ cancellation request 30 days before the next SIP due date. Your request for modification or cancellation must be backed by a duly filled application with the revised terms of the SIP investment and a written and duly signed request for discontinuing the existing SIP.

8. What can happen if my bank did not have adequate balance at the SIP due date?

If there is insufficient balance in the account and the SIP fails for four consecutive instances, your SIP will be cancelled automatically.

9. Is KYC compliance important for SIP?

Yes, Know Your Customer (KYC) is very important and must be ensured before starting any SIP investment. Your address proof and valid identity proofs must be submitted along with the SIP application in case the KYC procedure has not been done before.

10. Is there any exit load if I want to redeem my SIP investments?

If you want to redeem your mutual fund investment, the exit load, which was applicable at the date of starting the SIP will be considered. For more details on the load structure of each fund, you need to refer to the ‘Scheme Information Document’ or the ‘Key Information Memorandum’ of the particular fund.