Systematic Investment Plan, commonly known as SIP, is a way to invest in mutual funds. Under SIP, you invest a fixed amount for a particular period at a fixed interval. SIPs offer their investors the privilege to manage their investments as per their convenience. It also comes handy when the investor doesn’t have enough cash in hand to invest in their desired mutual fund investments at one go. However, there are a lot of myths and delusions around SIPs doing rounds among investors. Let’s bust some of these common myths:
- SIP is an investment product in itself
When investors encounter the concept of SIP investments for the first time, they often tend to believe that SIP is an investment product that is pitched to them. However, they must realise that that is not the case. SIP is an investment facility that permits investors to make regular investments.
- SIP investments guarantee positive and promising returns
Ensuring assured positive returns is the ulterior motive of each investor. They tend to consider investing in mutual funds via SIP as a guaranteed measure to eliminate the risk of undesirable returns. However, one must note that although SIPs mitigate risks over the long term, even they are prone to negative returns. This is because like other forms of investments, SIPs invest across the market trends.
- SIP is only suitable for small investors
SIPs are usually promoted as a medium to earn money on investments with an amount as low as Rs 500. As such, people often believe that it is registered only for making small ticket investments. However, this is not true. An investor is free to invest any amount in an SIP. In fact, a significant SIP amount would aid the investors to accumulate a substantial amount after a period to achieve their goals.
- A heavy penalty is charged in case of pausing or stopping your SIP investments
There is no rule of levying a hefty fine or a penalty in case an investor defaults their SIP investment. However, if you miss three consecutive SIP instalments, the Asset Management Company or the bank cancels your SIP. Hence, it is wise to always inform your AMC before pausing or stopping your investments.
- You cannot change your SIP tenure or SIP amount once you have started your SIP
Contrary to what most investors believe that they cannot alter their SIP details after committing to it, SIP is flexible in each way possible. You are free to change your investment amount or tenure whenever you want according to your needs, making them one of the most desired investment facility among investors.
Do not fall in the trap of false connotations and disbeliefs. So now that you have cleared your apprehensions about investing in mutual funds via SIP mode, advance a step ahead towards investing straight away and start investing in your financial goals. Invest in mutual funds online via SIP and secure your future. Happy investing!