5 Types Of Mutual Fund SIPs You Probably Didn¡¯t Know About

The last decade or so has seen investments through the SIP route jump to newer all-time highs multiple times, which is in itself a testament to how the popularity of mutual funds has been rising in our country.

But rarely are investors aware of the non-regular types of mutual fund SIP modes that are available to choose from. Curious to explore? Read on as we unfold five lesser-known SIP routes through which you can invest in mutual funds:

5 Lesser-Known Types Of SIPs

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1.Step-up/Top-up SIP

Top-up SIPs are also known as step-up SIPs. Here, you increase your SIP contribution periodically. For instance, if you are currently doing a SIP of Rs. 10,000 monthly and the yearly top-up rate is 10%, the next year, your SIP amount will be Rs 11,000. So, with step-up SIPs, you can keep increasing your SIP on a yearly basis. The idea of top-up SIPs is that you should increase your SIP amounts in line with your annual increments.

A top-up SIP allows you to generate more wealth as compared to regular SIPs for a given period as you incrementally invest more every year.

2.Flexible SIP

Flexible SIPs give you the flexibility to make changes to your SIP investment. This change can be in terms of the SIP amount or the frequency of SIP. If you want to make changes in your SIP terms, you can intimate that to your fund houses, but remember that this change should be communicated one week prior to the next due date of SIP.

A flexible SIP allows you to increase or decrease your SIP contributions on the basis of market conditions. For example, if the markets are high, you can decrease your SIP; conversely, in the case of a falling market, you can increase your SIP. In the same way, if there is a change in your income, then you can increase or decrease SIPs accordingly.

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3.Perpetual SIP

Perpetual SIP is the same as regular SIP but does not have a fixed investment tenure. In this type of SIP, you have to keep investing until you request the fund house to stop your SIP. This SIP gives you the advantage of long-term compounding; you do not have to worry about SIP renewals. However, you can redeem your investment anytime, as per ET Money.

4.Multi SIP

A multi-SIP allows you to invest in multiple schemes of the fund house through a single SIP. For example, if you start a multi-SIP with Rs. 10,000 in four schemes, Rs. 2,500 will be allotted to each of them.

Also Read: Benefits Of Investing In Mutual Fund Through SiPs

5.Trigger SIP

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As their name suggests, in the case of trigger SIPs, investments happen only when a specific event occurs in the market. This specific event can be a favourable market movement or a predetermined NAV level. To profit from this type of SIP, you must have an understanding of the market. Thus, this SIP is meant only for experienced investors with the required time and adequate knowledge. If you are a hands-off type of investor, this SIP is not for you.

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