A mutual fund is a professionally managed company that collects money from many investors and invests it in securities such as stocks, bonds and short-term debt, equity or bond funds and money market funds.
Mutual funds are a good investment for investors looking to diversify their portfolio. Instead of betting everything on one company or sector, a mutual fund invests in different stocks to try to minimize portfolio risk.
The term is typically used in the US, Canada and India, while similar structures around the world include the SICAV in Europe and the open-ended investment firm in the UK.
Is it possible to change the SIP amount every month?
SIP in Mutual Fund is like running a marathon. Marathon runners train throughout the year, but continue to step up their goals each year starting with the dream race, moving on to half marathon and finally a full marathon. The same applies to SIPs.
Systematic Investment Plans (SIPs) are a disciplined way of investing in mutual funds that offer the dual benefit of managing market fluctuations through average rupee costs and long-term compounding power. SIPs have become a popular way of investing in mutual funds as they allow small and regular investments for many years. Does this mean you’ll be stuck forever with the initial SIP amount you started with? The answer is no.
Let’s say you started with INR 3000 p.m. in Equity Mutual Fund and continued investing for two years. If you want to commit more money to this SIP, go for SIP top-up which allows you to automatically increase the SIP amount by a predefined percentage (say 50%) or the amount (say INR 1500) at regular/annual intervals. While you can’t automatically increase your SIP amounts every month, you can increase them at specific intervals like quarterly or annually through top-ups. You can also make additional purchases in the folio of your SIP account whenever you want to invest more money.