Systematic Investment Plan (SIP) for NRIs

Systematic Investment Plan (SIP)
is a scheme which allows investors to invest periodically a fixed
sum of money, even as low as Rs. 500 through a specific investment
vehicle, for a pre-determined period. Similar to a recurring deposit
with several investment options, SIP is ideal for the long term
as it builds your assets without nibbling into your resources. The
very purpose of a SIP makes it a nice option for cross border investors
looking forward to pump in different funds in India.

SIP allows you to buy more units when the purchase price is low
and fewer when the market is bullish. Since your return depends
on the price at which it is bought, average cost of purchasing is
lower than an ad-hoc purchase.

SIP protects investors from a volatile market – in fact; it turns
market fluctuations to your advantage.

Can investments be made in different dates through
the month?

SIP enables investors to invest regularly without timing the market.
But it is better to fix different dates for SIPs in different funds.
You can maximize returns on short term increases in the bourses
this way.

All funds offer a choice of 4 different dates a month, so maintain
those dates every month
Investing through SIP on different dates benefits the portfolio
as a whole. E.g. if you buy units of one MF when the Sensex as at
a high, and another when it is lower, your cost is leveled

Does an investor require issuing cheques every
month to invest through SIP?

SIP offers the convenience of post dated cheques, which the MFs
deposit on requested dates, and credit the units to the investors
account. Alternatively, your bank can be instructed to debit your
account on selected dates.

What returns can the investor expect over a period
of 7 years?

MFs have been performing consistently, averaging 25% annually over
a 10-year time frame. As a conservative evaluation, 15% returns
can be expected over 7-10 years.

SIP enables you to get compounded benefits from low periodic investments
ensuring stable and consistent returns over the long term.

Can the investor switch to another fund if one
of my schemes is underperforming?

SIP delivers best returns when continued over a complete market
cycle Review the performance of your funds regularly to optimize
your investments, and yes, you can switch to another fund.

Alliance Equity Fund, Birla Advantage Fund, DSP Merrill
Lynch, Franklin India Prima Plus, HDFC Equity Fund, Kotak
30, Principal Growth Fund, Reliance Growth Fund, Sundaram Growth
Fund and Tata Pure Equity Fund have been performing consistently.

Photo: Crimean trolleybus 2823 2021-04 Trolza-5265 SIP airport by Svetlov Artem, licensed under CC BY-SA 4.0, via Wikimedia Commons.