How to invest in mutual funds through SIP

Systematic Investment Plans, commonly known as SIPs, are the investment plans offered by mutual funds houses to invest a fixed amount in a mutual fund scheme at periodic time intervals. One can start with SIPs from as little as Rs 500 a month.

Money9 Helpline hosted Omkeshwar Singh, head- RankMF, Samco Securities to resolve all the queries related to investing via SIP.

Edited Excerpts

Anindya Dutta, Kolkata: I invest in mutual funds through monthly SIP, my advisor is advising me to switch to a smart SIP model instead of the monthly SIP. Is switching to smart SIP advisable?

Singh: Smart SIPs calculate the margin of safety. It calculates the intrinsic value of the mutual fund scheme, whether the value is high or low at that time. If the value is high it will hold the money in liquid if low then it will invest in equity. SIPs are for the long term as they do not consider the market forces. Whereas smart SIP will also consider the market forces and give additional 4-5% returns.

Arun Singh: How does Step-up SIP work? Can we increase by 5% every year?

Singh: Yes definitely. The top or step-up option is available with the AMC. When you register for SIP, there is an option for a top-up present which you can apply. You can also set how much percentage you want to keep.