Don’t worry if you don’t have lakhs of rupees to invest in. Even if you diligently invest a few hundreds or thousands of rupees every month, you also can retire rich, provided you start investing at an early age and time is on your side to see your money grow. 

It is like the long meandering path to reach a high mountain peak rather than a very steep short-cut to the mountain-top. If you follow the first path, you can easily scale the mountain without losing your breath. But if you follow the second path, you even risk your life from falling down. 

A SIP not only helps in lowering your average investment cost as you remain invested through the thick and thin of markets over a long period of time, you also reap the benefit of compounding of returns, which even Albert Einstein called the eighth wonder of the world. In Einstein’s words, ‘Compound interest is the eighth wonder of the world. He who understands it, enjoys it and he who doesn’t, pays it.’  

No doubt the SIP route to investment is increasingly gaining popularity among both small and big investors because of its several advantages. Start investing albeit a small amount right away. If you delay your investment pondering over risks and losing your money, you may actually lose many things in the fear of losing it. Think of it. Despite several instances of steep downfalls and times of extreme volatility over the last 42 years, the stock market bellwether Sensex has scaled nearly 53000 points from 100 points since it came into being on April 1, 1979.

                 (All figures in Rs crore)

Source: Association of Mutual Funds in India

1.Number of Mutual Fund SIP accounts stood at 4.02 crore as at the end of June 2021

You can open a SIP account with a mutual fund house for a fixed period say, 5 years or 10 years. However, if you intend to close or renew the account post expiry of the fixed period, you’ll have to inform the fund house about your decision at least three weeks before the expiry of the time period initially intended. 

In case of a perpetual SIP, there is no mention of a definite time period for the SIP. The time period of investment is open-ended. 

So, a perpetual SIP is more flexible in the sense that an investor doesn’t have to remind the fund house for renewal of his/her SIP account. 

SIPs also give one the flexibility of increasing or decreasing the investment installment amount.   

There is no penalty for withdrawing from a fund in which one is investing through SIP mode, as SIP and withdrawal (redemption) are two separate mandates. However, exit load may be charged for redeeming before a stipulated period. In case of investment through SIP, every instalment is treated as a fresh purchase. Thus, the exit load charged will depend on the holding period of each instalment. If one is investing an amount of Rs 1,000 through monthly SIP in a fund that charges an exit load of 1% for holding period less than one year and now wants to withdraw towards the end of 2 years, then investments made in the first 12 months will not attract any exit load. Investments made after 12 months will attract the 1% exit load. Withdrawal from a plan does not automatically stop the SIP. Your SIP instalments will continue to purchase fresh units, even as you withdraw from the fund. Hence, if you do not want to continue with the SIP, then you would need to separately request for its cancellation.