Systematic investment plan or SIPs have become very popular among mutual fund investors. Nearly Rs 6,000 – 8,000 crore worth of inflows come into mutual funds every months through SIPs, even since December 2017. Up until then, only about Rs 3,000-4,000 crore of money used to come. But despite being a popular facility, there are many facts about SIPs that many of us still don’t know. For instance, SIP is not a separate product. It is a facility that all MF schemes offer. 

 

It’s easy to start an SIP. Today, all mutual funds allow you to start an SIP with as little as Rs 1,000 a month. That’s all it takes to start an SIP; a facility that allows you to put money automatically, once a month. Infact some fund houses allow you to start an SIP with Rs 500 and even as little as Rs 100 a month. 

 

Still, there are many unanswered questions. In June 2020, Moneycontrol did a study with CRISIL Ltd on SIPs that spoke about the merits of investing in SIPs for the long run. But many investors come across hurdles in the interim. For instance- and especially during the Covid-19 pandemic- many investors lost their jobs or saw a fall in their income. In such times, it’s hard to continue with SIPs. Some investors cancelled their SIPs in the face of other priority expenses they just couldn’t get out of. But how many days does it take to cancel an SIP? It’s common knowledge that despite submitting an SIP cancellation request, the SIP doesn’t get cancelled immediately. In many cases, one installment still goes out of our bank account. 

 

And did you know that if you wish to withdraw from your fund, you don’t need to stop your SIPs? While your SIP continues, you can 

continue to withdraw from your scheme (from the accumulated corpus) as well as invest lumpsums as and when you wish. In today’s podcast, I am joined by Parul Maheshwari, a Mumbai-based certified financial planner. She will demystify SIP for us and bring us several unknown facets about SIP.