Myths about SIPs you shouldn’t believe

Investing through a

Systematic Investment Plan (SIP)

is a great way to structure & regularise a savings plan while ironing out the economic and business volatility that affects your capital.

However, there are quite a few misconceptions regarding SIPs, so let’s address them.

SIP is a type of investment.

SIP is an investment tool.

A systematic investment strategy is the best.

No one size fits all. Your investment strategy would depend on your goals, risk profile, fund availability, etc.

SIPs have to be timed.

The basic premise of SIP is to achieve ‘rupee cost averaging’ so that you don’t have to time the investment.

You cannot stop a SIP or miss a payment.

SIP is an investment, not a liability. You have absolute control over how you invest.

SIP can be used for any kind of mutual fund.

Debt funds have zero to minimal volatility, hence SIPs work best for equity-based funds.

The commencement date of the SIP is considered for investment period when accounting for tax purposes.

Each SIP instalment is considered as a new investment.

SIPs are for investors with a lower investment threshold.

There is no upper limit on SIP investments.

It pays to do one’s due diligence before investing in any investment scheme.

We hope you now have better clarity on mutual fund SIPs.