What is Systematic investment plan (SIP) in mutual fund?

Systematic investment plan in mutual fund is a type of investment which facilitates the investor to invest a fixed amount of rupees on specific dates on periodic basis for a predefined period.


What are the modes of Systematic investment plan (SIP) in mutual fund?

The common modes of Systematic investment plan in mutual fund are One Time Mandate (OTM), Standing Instruction and Invest Online etc.


Can I increase my investment amount in my SIP at a regular interval?

Yes, being an investor you can increase the SIP amount at regular fixed intervals.


What are the options of SIP top up by which I can increase my investment amount?

There are two options of SIP TOP-UP – (a) Fixed Top Up (b) Variable Top Up

  • Fixed Top Up: This option facilitates you to increase your SIP at regular interval with fixed amount of minimum Rs 500 and its multiples thereof. This optional facility is available for SIP TOP-UP frequency of Half Yearly and Yearly basis. In case of Quarterly SIP, only the Yearly frequency is available under SIP TOP UP.
  • Variable Top Up: This option facilitates you to increase your SIP at regular interval with fixed amount. This Top-Up will be based on the percentage (%) opted by you with minimum Top Up percentage of 10% and in multiple of 5% thereof (rounded off to the nearest highest multiple of Rs.10). The frequency of Top Up is available on Half Yearly and Yearly basis.

Being a SIP investor, can I opt both the Top Up options?

Investor can either opt for Fixed Top-up facility or Variable Top-up facility under SIP Top-up. In case, Investor opts for both the option, than Variable top-up feature shall be triggered.


I have invested in micro SIP. Can I use Top Up Facility?

Yes, You can use Top Up facility subjected to your investment including top up should not increase Rs 50000 in a rolling 12 months period or Financial Year.


I wish to invest in mutual fund. Give me a comparative analysis of Equity fund/Debt Fund/ SIP.

Every investor need to invest in tune of their investment objectives and future requirements and Risk bearing capacity. A very general analysis is given below for your reference

Equity funds are based on equity markets which are highly volatile. The shares prices vary considerably on day-to-day basis. In such a scenario, if you put a lump sum amount of money, you could either gain big or lose high.

Debt funds are based on debt markets which are relatively quite stable. If you put your money today or tomorrow or next month, it is not going to make much difference. As such, even if you were to put your lump sum in a debt fund, you are not likely to lose but earnings will be not very high as compared to the equity funds.

If you invested small amounts regularly, in SIP, you will average out your total cost of acquisition; therefore you will cut down the volatility risk and increase your chances of making money.

Right portfolio design, Diversity and Balancing can give you the desired results.


What is Top up Cap in SIP?

Top Up Cap is a facility by which Investor can freeze the SIP Top-Up amount once it reaches at the fixed predefined amount. The fixed pre-defined amount must be equal as the maximum amount mentioned by the investor in the bank mandate. In case of any difference between the Cap amount & the maximum amount mentioned in bank mandate, the amount which is lower of the two amounts shall be considered as the default amount of SIP Cap amount.


What is Cap Month Year in SIP?

Cap Month Year refers to the date from which SIP Top-Up amount will cease and last SIP installment including Top-Up amount will remain constant from Cap date till completion of SIP tenure. Investor shall have option to choose either Top-Up Cap Amount or Top-Up Cap Month-Year. In case of multiple selections, Top-Up Cap Amount will be considered as default selection. In case of non selection, the SIP variable Top-Up amount will be capped at pre determined default amount.


What is Micro SIP?

Micro Sip allows you to pay smaller investment in periodic form (monthly or quarterly) with a maximum investment limit of Rs 50000 per year (Aggregate of installments in a rolling 12 months period or in Financial year) per investor and are exempted from the requirement of PAN with effect from August 01, 2009. This exemption is applicable only to the investors who fall in category of individuals (including Non Resident Indians but not Person of India Origin), Sole proprietary firms and Joint Holders. Eligible Investors should attach a copy of Know Your Client (KYC) acknowledgement letter quoting PAN Exempt KYC reference no. (PEKRN) obtained from KYC Registration Agency along with the investment application form.


Can I stop my SIP periodical payment on temporary basis?

Yes, You can stop your periodical payment on temporary basis by using SIP Pause facility but it is available only with monthly frequency.


Define me the SIP pause facility.

SIP Pause can be defined as a facility by which investors can pause existing SIP for a temporary period (minimum 1 month maximum 3 months) at a desired point of time by filing the SIP Pause Form. This form must reach 30days prior to the effective SIP pause date. This SIP pause facility is available once in the SIP tenure with minimum one month to maximum three months pause limit. SIP payment shall restart automatically after the completion of pause period.


What is Systematic Transfer Plan (STP) in Mutual Funds?

Systematic Transfer plan is a facility which enables an investor to transfer denoted amount of investment from one scheme to another scheme of the mutual fund.


Define me the STP process of mutual fund.

The process of Systematic Transfer plan starts from filling the STP application Form in which investor need to provide details like Amount to be transferred, From and To date, Source and Target Scheme information etc. The processing of transaction takes place from source scheme to target scheme on immediate business day at the applicable NAV. Generally the STP dates are 7th, 10th, 15th, 25th and last business day of the month if the investor selects monthly transfer Frequency. Weekly STP is processed on every Monday. The request for STP should be received on or before the last business day of the week preceding the week in which the effective transaction date falls.


What is Flex STP in Mutual funds?

Flex STP in Mutual funds is a facility by which unit holders can opt to transfer variable amounts linked to value of investments at pre-scheduled intervals from designated open – ended Scheme (Transferor Scheme) to the designated open-ended Scheme (Transferee Schemes).


What is systematic Withdrawal (SWP) plan in Mutual Fund?

This is a facility in which investors can specify the schedule of withdrawal of pre defined amount out of their investment from a scheme of mutual fund at a regular time interval by making a SWP request to the source scheme. The SWP will stop automatically if all the units are withdrawn from the folio or expiry of enrolment period, whichever is earlier.


Who can avail relaxation in document requirements for micro SIP schemes?

Relaxation in document requirements for micro-SIPs is not available for HUFs and non-individuals. Such relaxation is available for NRIs.


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Categories: SWP and STP