What is SIP, Systematic Investment plan this is what I am going to explain you in hindi, its benefits and other details.
SIP means investing smaller amount on regular period of time for continuously for few years. The money invested in SIP is used to buy mutual funds basically it is used to buy NAVs(Net Asset values) which is basically a value given to a particular groups created by adjoining different equities of same subset(Same subset means having same properties like it can be of same values in market nearly, or may be basis of classification like finance, bluechip, banking etc)
You invest money in a mutual fund. This is an investment. SIP is a method of investing in mutual funds.
While investing small amount of money can give you good returns even may be better than recurring deposits. The longer you invest the more you will accumulate money.
Investing and opting out can be done anytime whenever you want it does not penalize for this.
This is a flexible option to invest money. However NAV value as totally dependent on mutual funds so totally it depends on equity market directly.
What is NAV: The Net Asset Value (NAV) of a mutual fund is the price at which units of a mutual fund are bought or sold. It is the market value of the fund after deducting its liabilities. The value of all units of a mutual fund portfolio are calculated on a daily basis, from this all expenses are then subtracted. The result is then divided by the total number of units the resultant value is the NAV. NAV is also sometimes referred to as Net Book Value or book Value
Investments cab be done on daily\monthly or quarterly basis.
Compounding and rupee cost averaging is the main reason which will give a good amount on your money.
For equity funds always withdraw money after 1 year of investment to avoid tax.
For non-equity funds withdraw money within 3 years to give tax as per your income slab.
Now the question arises how should we invest, what all factors we should consider.
Basically main thing we can see before investing:
1. CRISIL rating.
CRISIL is an organization which provides ranking to different mutual funds based on their performance in each quarter.
CRISIL (formerly Credit Rating Information Services of India Limited) is a global analytical company providing ratings, research, and risk and policy advisory services. CRISIL’s majority shareholder is Standard & Poor’s, a division of McGraw Hill Financial and provider of financial market intelligence.
2. Second thing you can see that how old is the mutual fund and what is the performance in last three years.
3. It’s always good to build a diversified portfolios for investment.
Main requirements to buy SIP\Mutual Funds
1. PAN Card
2. Bank Account
KYC Registration Documents Required
1. 2 Passport Size Photo
2. PAN Card
3. Address Proof
4. Bank Details
Those who already have Demat accounts, there KYC would have already done when they would have opened the account. Also if having demat account we can buy SIP online. Now a days eKYC is also done.
Top Rated Mutual Funds
Sites to Buy SIP Online
What is ELSS : Tax saving mutual funds (commonly known as Equity linked Saving Schemes – ELSS)
Only investments in Equity Linked Savings Schemes (ELSSs) or tax saving mutual fund schemes qualify for a tax deduction under Section 80C (Max Rs 1.5 Lakhs)of the Income Tax Act. ELSS funds have a lock-in period of 3 years and invest a majority of their portfolio in the stock market.
The invested amount can be withdrawn only after 3 years. ELSS funds do not allow premature redemptions before completion of the 3 year lock-in period.
ELSS funds have two plan options: growth and dividend, Growth option is recommended for long term capital gains. In dividend option customer can choose pay-out of dividends or reinvestments of dividends. Dividend received will not be taxable however if you are reinvesting the dividend it will be treated as fresh investment and you can claim tax benefit from it.
A Direct plan is what you buy directly from the mutual fund company (usually from their own website), whereas a Regular plan is what you buy through an advisor, broker or distributor (intermediary). In a regular plan, the mutual fund company pays commission to the intermediary and therefore its little bit less fruitful.
Please watch the complete video for proper understanding.
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