Now we should concentrate on the hidden factors that are generally not being told but we face them eventually as after the entry into the SIP’s.ġ) High first-year cost. You are required to pay a creation and sales charge equal to as much as 50 percent of the first 12 monthly investments. In other words, if you invest Rs.100 per month for the first 12 months of the plan, Rs 600 of your Rs 1200 investment goes toward the creation and sales charge in such a plan. With all four factors of advantage still you should remember that you need to pay a fixed amount monthly irrespective of the economical condition. With this being said from the top this looks too convincing that we have so many advantages by SIP which the fund houses also make you count likeġ) Disciplined Investor 2) Rupee cost averaging 3) Compounding Benefit 4) Effortless service. we are asked about the scheme in which we want to do SIP and the SIP monthly amount which we need to pay at regular on monthly basis. Whenever you go for SIP of any fund house like HDFC, ICICI, AXIS, Franklin Templeton etc. To answer this i need to elaborate you how your SIP will work on MF houses. Now question arises Why am i supporting the “NO” answer to above question more ? Having justified my “yes” to the second part of question i still believe that “NO” is better answer to the second part. As the MF houses have a group of people who are professional in this field so we for a safer side can chose them. But i say “Yes” because for doing an SIP we must have Knowledge and Understanding of the financial market, prevailing economical conditions and much more. Reason why i first said “No” is that it is not essential for any of us to go to MF houses and take an SIP plan. For the second half of question i say No/Yes. To answer the first part of the question i say Yes we can with disciplined approach create our own SIP. It is imperative to understand the concept of rupee cost averaging and the power of compounding to better appreciate the working of SIPs.Ĭan we create our own SIP or we have to have go to Mutual Fund houses? Thus, you can invest in an MF without altering your other financial liabilities. SIP allows you to pay 10 periodic investments of Rs 500 each in place of a one-time investment of Rs 5,000 in an MF. It allows you to invest in a MF by making smaller periodic investments (monthly or quarterly) in place of a heavy one-time investment i.e. It is like your recurring deposit where you put in a small amount every month. SIP works on the principle of regular investments. What is Systematic Investment Plan or SIP?
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