Systematic Investment Plan (SIP) - Mutual Fund FAQ's
1. What is a Systematic Investment Plan or SIP?
A SIP is an easy and convenient mode through which you can invest fixed amounts regularly in a mutual fund scheme of your choice. SIPs are the preferred choice of investment of majority of our investors whose objective is long term wealth creation. 3 out of our 5 customers who invest actively in Mutual Funds prefer to invest in Equity Mutual Funds for long term wealth creation and out of these every second customer prefers to invest through SIP.
2. Why Systematic Investment Plan (SIP) is the preferred mode of investment?
Few of the reasons are listed below:
First, SIP is a disciplined way of investing: It inculcates saving habit & discipline in investments by making you invest on a regular basis. A disciplined approach in investment, like the most things in our life, helps in achieving our goals i.e. in this case building wealth over long term
Next, SIPs are easy on pockets - Investment through a SIP could be done with amount as low as Rs.1000 per month
Also, you need not worry about timing the market while investing through a SIP – In a SIP, investments are made at regular intervals – irrespective of the market highs and lows. So, you get more units when the markets are low and less units when the markets are at a high. This helps in averaging out costs and keeping the cost of a unit at a lower level. Since timing the market or deciding upon what is the right time or level of market is not easy, you should keep investing in Equity Mutual Funds regularly through the SIP route
You get benefit of more time spent in the market while investing through SIP - With smaller amounts to invest through SIPs, you can start investing early. This gives the invested amount more time in the market which increases the probability of higher returns
Thinking when to start investing? There is no time like NOW to start investing through SIP. The earlier you start investing, the better it is
3. What are the new Systematic Investment Plan (SIP) features added into Mutual Fund in ICICIdirect.com site?
New features in Systematic Investment Plan (SIP) are as follows:
New Period option » Till Cancellation
Increase the SIP Installment Amount periodically » Step-Up
Auto Renewal » Now Perpetual, earlier it was only once
Do not want the SIP Installment of next month to trigger » SIP Pause
Want to see what would be the future value of your SIP Investment » See Future Value Chart
4. What is Period “Till Cancellation” in SIP?
For SIP with Period “Till Cancellation”, the SIP installment amount gets deducted basis frequency selected till the investor themselves don’t cancel the SIP. In this case SIP doesn’t get auto renewed as the SIP is Active till it is cancelled
MF Transaction charges are not applicable if the SIP period is selected as Till Cancellation
5. Can SIP with Period “Till Cancellation” be cancelled?
Yes, you can cancel your ongoing SIP with period “Till Cancellation” any time from SIP book. Menu Path for the same is provided below
6. Can SIP Installment amount be increased? (Step-Up)
Yes, SIP Installment can be increased by using “Step-up” feature available at the time of SIP
Registration. Investor can Step-up their SIP Installment Amount only if the period of SIP is “Till
Cancellation”. If investor didn’t opt for “Step-up” feature while registration, then it can be done later
any time from SIP book. Menu Path for the same is provided below
ICICI Direct.com » Trade & Invest » History » Books: SIP (Set Step up link in Action column)
7. What is Step-up feature in SIP?
Step-Up SIP is a process that will increase your Mutual Fund SIP Installment amount periodically by an amount and at a set interval as defined by you. Minimum interval at which you can increase the SIP Installment is 6 months and minimum amount by which you can increase the SIP Installment amount is Rs. 100.00 subject to the ‘Multiple’ of SIP Instalment Amount and Step-Up Amount are same
For Example :
Let’s assume you set up a New SIP with installment amount as Rs 2000.00 for 36 months and selected Step-Up option
Let’s also assume you selected the incremental amount as Rs 500.00 and interval to Step-up the SIP is 6 months
Flow of SIP Instalments in this case will be as follows :
Currently "Step-Up SIP" option is only available for SIPs with period "Till Cancellation
8. What is auto renewal of SIP?
To ensure uninterrupted investment, user can set “Auto renewal” for their ongoing Active SIP. Auto Renewal feature can be availed at the time of Registration of SIP. If user has not opted for Auto renewal of SIP at the time of registration then it can be done later on from SIP Book. The renewal of SIP in case of Auto Renewal is perpetual i.e. SIP will get Renewed on the date of expiry
ICICI Direct.com » Trade & Invest » History » Books: SIP (Set Auto Renewal link in Action Column)
9. Can Auto renewal of SIP be cancelled?
Yes, Investor can cancel “Auto Renewal” of their ongoing SIP any time from SIP Book. Menu Path for SIP Book is provided below
ICICI Direct.com » Trade & Invest » History » Books: SIP (Cancel Auto Renewal link in Action column)
10. What is “Pause” feature in SIP?
“Pause SIP” is a feature where in Investor can pause up to 3 SIP installment from getting deducted. If investor wants to cancel the “Pause SIP” request then the same can be done from SIP book by clicking on “Resume” link. SIP can be paused only after the first installment
To Pause Ongoing SIP Installments follow below Menu Path:
ICICI Direct.com » Trade & Invest » History » Books: SIP (Pause link)
To cancel “Pause” request or to “Resume” SIP Installments follow below Menu Path:
ICICI Direct.com » Trade & Invest » History » Books: SIP (Resume link)
Investor can view the No of paused installments in “Remark” column on SIP Book.
11. What is Future Value Chart?
Future Value Chart is a graphical representation of expected end value i.e returns basis SIP Installment Amount, Period and Returns.
The main objective of this illustration is to make you understand the end value of Mutual Fund SIP Investment with different investment amount and different investment duration. This assumed rate is not guaranteed and they are not upper or lower limits of what investor will get.
12. What is the difference between Period Till Cancellation & Auto-renewal?
In case of auto-renewal SIP expires at the end of selected SIP period and gets renewed automatically after that. While in case of Period Till Cancellation, SIP does not expire and continues till the user cancels the SIP.
Mutual Fund Transaction charges are not applicable if the SIP period is selected as Till Cancellation. If a user has selected Auto-renewal option Mutual Fund transaction charges would be applicable
13. Is Step-Up option available if auto-renewal of SIP option is selected?
No, SIP Step-Up option is only available if the selected SIP period is Till Cancellation. In case of Auto-renewal of SIP, Step Up will not be available.
In order to set Step-Up option, user would have to modify SIP. SIP can only be modified after the completion of 6 installments. For example, if you have registered a monthly SIP which will start from Jan 12, 2017, then you can modify the SIP after 6th installment i.e. only after June 12, 2017
14. What is the difference between Set Step-Up & Modify option?
Modify option helps a user to change the SIP investment date, SIP investment amount, SIP Period & frequency of investment. A SIP could only be modified after the completion of 6 installments. For example, if you have registered a monthly SIP which would start from Jan 12, 2017, then you could modify the SIP after 6th installment i.e. only after June 12, 2017.
Please note there are select dates allowed by Mutual Funds on which SIPs get triggered, so while modifying SIP you can select the date of trigger of SIP from the available dates only
Set Step-Up option allows the user to set-up Step-Up for SIP to automatically increase the SIP investment amount after every period selected by the customer.
Both these options are available in SIP Book under History.
15. How could one select Step-Up option for existing SIP?
Step Up option could be selected for existing SIP with period Valid Till Cancellation from SIP Book under History. For such SIP(s), Step-Up option could be configured anytime i.e. even before the trigger of first installment
16. Why should you invest in Mutual Funds online through ICICidirect.com?
With various features available at ICICIdirect.com, you can transact seamlessly at your convenience and control your investments far more efficiently
Also by investing online you do not need to stand in queues, keep writing cheques, fear missing the cut off each time you wish to transact, spend numerous hours creating your consolidated portfolio and computing capital gains
You also have the option of experiencing the various features we offer by transferring your existing mutual fund holdings to your ICICIdirect.com account
Following is the snapshot comparing the various features and benefits associated with investing online with ICICIdirect.com :
You can invest from anywhere anytime
Transaction experience is completely paperless
You also get option to invest in a readymade basket of top performing schemes in just a single click through One Click Investment Portfolios
You can generate consolidated Capital Gains Statement in just a few clicks
You also get the facility to periodically increase SIP investment amount with Step-Up SIP feature
You also get option to pause your SIP installments for a maximum of 3 months with SIP Pause feature
Now, you can set up SIP period as valid till cancellation and do not worry about tracking expiry of your SIP
You can also view your Consolidated Portfolio across schemes and asset classes
You also get automated alerts on change in research recommendations on One Click Investment Portfolio
Email alerts are sent for each transaction
Status is updated at all stages of a transaction to keep you informed
Portfolio recommendation are available on time horizon & risk-profile in Mutual Funds place Order page
You can also view Personalised research recommendations against your holdings