Systematic Investment Plan, or commonly known as SIP in mutual funds is one of the best investment options available to investors. A lot of people confuse SIP as a product like mutual funds. However, it is a tool to invest in mutual funds. SIPs make your mutual fund investments straightforward and hassle-free. Owning to varying interests of different investors, there are several types of SIPs offered by Asset Management Companies (AMC). They are:

1. Top-up SIP
   Top-up SIPs provide their investors with the flexibility of increasing or decreasing their investment amount at fixed intervals. Since our salary hikes almost every year by a certain percentage, it makes sense to increase your SIP by the same percentage each year. For instance, let’s assume you started an SIP investment with Rs20,000 per month and asked for a yearly top-up of Rs3000. So, after first year your SIP would be Rs23,000 pm. Then after another year, it will go up to Rs26,000 and so on. As our age increases, our income also tends to increase and it is recommended that our investments should also increase as our goals increase and the time horizon decreases.
2. Perpetual SIP
   Under perpetual SIPs, there is no end date of your SIP investments. However, you have the liberty to redeem the fund any time according to your needs. Few years down the line, this facility was not available to investors and hence a lot of SIPs would automatically stop after a few months or years. Due to this stoppage, it required unnecessary paperwork to restart the SIP. More often than not, any sort of discontinuity would interrupt the power of compounding. Hence, this encouraged the introduction of perpetual SIPs.
3. Flexible SIP
   As opposed to traditional SIPs where the investment amount is fixed, flexible SIPs do not have a fixed amount. Investors have the option to change their amount every time before investment. Under flexible SIP, you need to choose a regular amount and the maximum amount you’d like to invest. This strategy is beneficial for individuals having an irregular income. Some pro-active individuals also resort to this method to invest more through SIP when the markets are low.
4. Trigger SIP
   Under trigger SIP, investors can redeem part or full amount of their investment or even automatically switch to another scheme as soon as the amount reaches a pre-defined trigger point. This trigger can be set for both downside or upside events. Trigger SIP method is beneficial to those investors who have a good understanding of the market volatility and the financial market.

Although these SIPs provide the convenience and flexibility to you, your key objective should be to stay invested for a long duration and avoid any short-term financial crisis. To help you plan your finances better, almost all fund houses offer an SIP calculator to get an estimate on your SIP returns. Happy investing!

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