By Soni 
Types Of Sip: The trend of investing through SIP (Systematic Investment Plan) is increasing rapidly. SIP is a means by which you invest a fixed amount in mutual funds at regular intervals. Usually people consider it a common investment plan, but there are many types of SIP. The purpose and benefit of every SIP is different. Let’s know about the 5 major types of SIP and understand which of these options is best for you.
1- Regular SIP: Simple and safe way of investing
Regular SIP is an option in which investors invest a fixed amount every month, quarterly, or half-yearly basis. This is the most common type of SIP and is preferred by many investors because the investment amount, date and period are pre-determined. Under this, you invest over a regular period which brings stability to your investment.
How it works: At the time of investment, you choose a fixed amount and date on which your investment will be deducted every month.
Benefit: In this SIP, you develop a habit of making regular investments, which gives good returns on investment in the long term.
2- Top-up SIP: Opportunity to increase investment over time
Top-up SIP is a flexible option where you can increase your SIP amount over time. As your income grows, you can also increase your investment in it. For example, if you make a SIP of ₹10,000 every month, you can increase it by 5% or 10% every year. This automatically increases your investment and gives you bigger returns in the long run.
How it works: After a certain period, the investor can increase his SIP amount, which can be done on an annual or half-yearly basis.
Benefit: The benefit of growth in investment is available, which can reduce the impact of inflation and increase returns.
3- Flexible SIP: Increase or decrease investment as per your need
Flexible SIP is very beneficial for investors because in this you can increase or decrease the amount of SIP according to your budget and need. For example, if your expenses have increased in a month, then you can reduce the SIP amount. For this, you have to inform your fund house one week before the date of SIP deduction.
How it works: Investors can decrease or increase their SIP amount, but for this it is mandatory to inform the fund house in advance.
Advantage: You get a chance to control the investment according to the financial situation, which gives you flexibility during investment.
4- Trigger SIP: Option to invest at the right time
Trigger SIP is useful for those investors who believe in investing at the right time. In this type of SIP, you can set some conditions in advance, such as time, market valuation, etc. When the condition set by you is met, your investment gets triggered. This is especially useful for those investors who want to take advantage of market fluctuations.
How it works: In this, the investment is deducted as soon as the conditions set by the investor are met.
Advantage: You can invest in the right market condition, which gives an opportunity for more profit.
5- Insurance-linked SIP: Insurance protection along with investment
Insurance-linked SIP is a unique plan that offers insurance protection along with investment. This facility is available only in Equity Mutual Funds. Under this SIP, the fund house also provides insurance cover to the investor, which can be 10 times the amount of the first SIP. After this, the insurance cover keeps increasing, which gives the benefit of additional protection to the investor.
How it works: The investor is given an insurance cover, which is a fixed multiple of the SIP amount.
Advantage: The benefit of insurance is available along with the investment, which also protects the investor.
Conclusion
All these SIP types have their own features and advantages. Regular SIP is for those who want to build a regular investing habit. Top-up SIP is better for those who want to increase their investments over time as per their income. Flexible SIP offers flexibility, while Trigger SIP gives the option to avail the investment at the right time. And finally, Insurance-linked SIP also gives insurance protection along with your investment.
It is important to choose the right SIP from these SIP options, according to your need and financial goal.