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In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/492
A Systematic Investment Plan (SIP) allows you to invest a fixed amount regularly in mutual funds, helping you build wealth over time through disciplined investing.
Imagine a way to grow your money effortlessly, where you invest a little each month and watch it multiply over time. You can turn your imagination into reality with Systematic Investment Plans (SIPs).
A Systematic Investment Plan (SIP) is a financial instrument that enables individuals to invest a set sum of money on a consistent basis, usually every month. Consider it as allocating a share of your earnings for your future self. The money is then put into mutual funds, which are overseen by expert fund managers.
As your income grows, you can leverage various SIP enhancements to boost your investments:
As your financial success unfolds, you have the option to augment your investments through top-up SIP. With this strategy, you can periodically increase the amount of your SIP contributions.
For instance, you can start with a SIP of ₹3,000 per month and raise it by ₹1,000 every six months. This means that after six months, your SIP will increase to ₹4,000, and then to ₹5,000 after the subsequent six months, and so forth.
In a perpetual SIP, there is no fixed end date. Your investments continue indefinitely until you decide to halt them, providing you with long-term flexibility.
Flexible SIPs offer the convenience of adjusting your investments according to your preferences or cash flow. While a fixed initial amount is determined at the outset, it can be modified to accommodate changing circumstances. This flexibility is particularly valuable when managing your SIP online.
Tailored for experienced investors, Trigger SIP allows you to set activators that automatically shift your investments to another scheme in response to market volatility. This sophisticated SIP variant empowers you to adapt to changing market conditions with ease.
Before understanding how SIP works, you need to get through the number of aspects that make it extremely useful to investors.
There are several methods involved in choosing the functioning of SIP. A few of them are mentioned below:
The first step in setting up an SIP is selecting a mutual fund scheme that aligns with your financial goals, risk tolerance, and investment horizon. There are various mutual funds available in the market, such as equity funds, debt funds, hybrid funds, and more. Each has its own risk-return profile, so it’s important to choose one that suits your needs.
SIP allows investors to choose the frequency of their investments. Most investors opt for a monthly SIP, but you can also choose to invest quarterly or semi-annually, depending on your convenience and financial planning.
To ensure a hassle-free investing experience, you need to authorize your bank to auto-debit the predetermined SIP amount from your bank account on the chosen date. This automation ensures that you invest consistently without manual intervention.
When your SIP amount is deducted from your bank account, it is used to purchase units of the chosen mutual fund scheme at the prevailing Net Asset Value (NAV). NAV is the per-unit market value of a mutual fund scheme and fluctuates daily based on the performance of its underlying assets.
SIP allows investors to diversify their portfolios by investing in multiple asset classes or sectors through various mutual funds. This diversification helps spread risk and potentially improves returns.
Investing in Systematic Investment Plans (SIPs) is a strategy that many people should consider due to its benefits, such as disciplined investing, rupee cost averaging, and the potential for long-term growth.
However, certain categories of individuals are particularly well-suited for SIPs and should definitely look into this investment option. Such range of individuals who should walk through their investment pathway is as follows-
Novice investors can gain advantages from SIPs because of their simple and well-structured characteristics. SIPs allow new investors to start with small amounts of money and slowly spread out their investment portfolio, providing an easy way to get into investing.
SIPs are advantageous for individuals with extended financial objectives, like saving for retirement or education. SIPs are an appropriate option for building wealth over the long term due to their ability to compound returns and their structured investment strategy.
Investors looking to stay within a set budget may find the affordability and versatility of SIPs appealing. They have the option to start with modest contributions and gradually raise them as they become more financially stable.
SIPs are appropriate for individuals Concerned about market movements. The rupee cost averaging effect mitigates the effects of market volatility by spreading investments over time, perhaps leading to more consistent profits.
SIPs are ideal for those who desire a disciplined and methodical approach to investing. Regular contributions promote saving habits and enable constant investing without the need for frequent decision-making.
It requires a thoughtful approach and careful consideration of several key factors to ensure that your investment aligns with your financial goals and risk tolerance. This approach not only helps in identifying the most suitable SIP for your needs but also enhances your overall investment strategy.
While selecting away the proper SIP investment, several steps are incorporated:
Begin by determining your investment goals, such as saving for retirement, purchasing a home, or funding a college education. Your goals will determine the most suitable mutual fund type and SIP for you.
Assess your risk tolerance to decide if you prefer pursuing aggressive growth via equity funds, moderate risk through balanced funds, or safe investments like debt funds. Make sure your risk level aligns with the mutual fund's investment strategy.
Evaluate your willingness to take on risk in order to determine whether you would rather seek high growth through equity funds, moderate risk with balanced funds, or safe investments such as debt funds. Ensure your risk level matches the investment strategy of the mutual fund.
Review the past performance of the mutual fund you are interested in. Although past performance does not guarantee future outcomes, it does offer insight into how well the fund has adapted to market fluctuations and generated profits in the past.
Examine the fund's expenditure ratio, which includes management fees and other costs connected with operation. Lower spending ratios can help to boost your net returns.
SIP investment is an excellent way to start your journey towards financial independence and achieving your long-term goals. By contributing regularly, leveraging rupee cost averaging, and harnessing the power of compounding, SIPs offer an effective and convenient way to build wealth over time.
All it takes is a basic understanding of the process and the capacity to commit to regular investments at predefined intervals. They serve as a valuable tool to help you accumulate savings towards achieving a financially secure future.
1
Establishing regular investment plans (SIPs) for monthly contributions promotes disciplined saving, ensuring consistent savings despite fluctuations in the market. Moreover, understanding the Systematic Investment Plan (SIP) can help utilize rupee cost averaging, reducing the impact of market fluctuations by purchasing more units at lower prices and fewer at higher prices.
2
Indeed, you can start a SIP with a small amount of money. SIPs are designed to be easily reachable and flexible, meeting the needs of investors across various budget levels. Numerous mutual funds allow individuals to begin investing with a small minimum amount, usually ranging from ₹500 to ₹1,000 per month.
3
A lump sum investment involves paying the total amount upfront, while an SIP involves making periodic payments.
4
The minimum duration for a Systematic Investment Plan (SIP) is typically outlined in the specific terms and conditions of the mutual fund. However, most mutual funds require SIPs to be invested for a minimum of one year. This means that once you start an SIP, you will usually need to continue making regular payments for at least one year before considering stopping or withdrawing your investment.
5
Yes, you can change or discontinue your Systematic Investment Plan (SIP) at any time based on your financial requirements and objectives.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/521
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
