A typical SIP entails monthly investments over a period of 10, 15 or 25 years. You are generally allowed to start your investment with a modest sum.
You do not have direct ownership of the funds. Rather you own an interest in the plan trust. The plan trust invests the investor's regular payments, after deducting applicable fees, in shares of a mutual fund.
Things that you should make clear before investing in an SIP
You should make certain things clear to yourself before going for an SIP investment. They include the following –
a. You should be confident about continuing to make payments for the term of the plan. Withdrawal in the mid way will almost certainly make you lose your money unless you are eligible for a full refund.
b. Check the fees charged by the plan. Also check the circumstances under which the plan waives or reduces certain fees.
c. Study the plan’s investment objectives. Take a note of the risks of investing in the plan. And check whether you are comfortable with them.
d. Check your statutory rights to a refund in case you cancel your plan.
You do not have direct ownership of the funds. Rather you own an interest in the plan trust. The plan trust invests the investor's regular payments, after deducting applicable fees, in shares of a mutual fund.
Things that you should make clear before investing in an SIP
You should make certain things clear to yourself before going for an SIP investment. They include the following –
a. You should be confident about continuing to make payments for the term of the plan. Withdrawal in the mid way will almost certainly make you lose your money unless you are eligible for a full refund.
b. Check the fees charged by the plan. Also check the circumstances under which the plan waives or reduces certain fees.
c. Study the plan’s investment objectives. Take a note of the risks of investing in the plan. And check whether you are comfortable with them.
d. Check your statutory rights to a refund in case you cancel your plan.
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