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Frequently Asked Questions
- What is a SIP?
SIP – Systematic Investment Plan is a disciplined way of investing wherein a fixed amount of money is invested in a pre-defined mutual fund scheme at a fixed interval. You decide the amount, the SIP date and the schemes in which you wish to invest. One can plan different life goals be it such as children’s future, retirement, international holiday, holiday home, etc.
- Is SIP a mutual fund?
People perceive that SIP is either a mutual fund or different than a mutual fund. However, the fact is that SIP is a style of investment and not a fund/scheme or a stock or an investment avenue. It is a vehicle to invest periodically in a fund/scheme of your choice.
- What are the benefits of SIP?
- SIP instills discipline as it is route which helps you invest a particular amount on a regular basis. A fixed amount gets invested automatically at a fixed interval. One doesn’t need to spend time on a regular basis to put the money to work.
- You can start small and there is no need to have a lot of money to start a SIP. A SIP of even Rs. 500 per month is sufficient to start with. And then depending on the goals and aspirations, one can increase the amount.
- With SIP, you don’t need to worry about timing the markets. Just stay invested irrespective of the market conditions. In doing so, you end up getting more units when the price is low and fewer units when the price is high. This in turn leads to a lower average cost per unit over time which is also called as rupee cost averaging.
- Enjoy power of compounding: With SIP, one can stay invested for a longer period of time. Over time as your investment generates returns, the returns get added to the principal amount and this in turn generates more returns. This process gets repeated leading to a big corpus. That’s how the magic of compounding works.
- Can I start a SIP online?
Indeed you can. As a customer of Axis Bank, you can use your internet or mobile banking credentials to login to your investment account and start a SIP online. Please click here to start your investment journey: www.axisbank.com/investments
- How important it is to choose the right date for SIP?
There is a notion that choice of SIP date plays an important role in the returns. Reality is that SIP date has very less significance over a long period of time. It is just a date for your convenience – the date of which you would like your bank account to get debited.
- Does SIP mean investing only in equity funds?
When it comes to mutual funds there is a general misconception that investing in mutual funds means investing in stocks. The same is felt about SIPs. SIP can be made in an equity, debt or hybrid scheme. This entirely depends on the investment horizon and risk taking capacity of an individual. SIPs generally work best for equity and equity-oriented hybrid funds given that these are prone to market fluctuations. However, for investment discipline, one can also invest in debt funds also.
- SIP should be started when the markets are high and should be stopped when the markets fall. Is that true?
Absolutely not and this is what most of the customers end up doing. The fact is that nobody can predict when the markets will be up or down. SIP provides rupee-cost averaging, and hence it should not matter if the markets are up or down. The most important thing to remember is to stay invested. This increases the potential to build wealth over a period of time.
- What if I miss my SIP dates or don’t have sufficient money in my bank account?
With auto-debit feature, firstly you don’t need to remember the debit dates as the bank account will get debited automatically on the date which you have selected for SIP. However, just in case for whatever reason the funds are not available in the bank account, you will miss one SIP. There is no penalty or any fee. Your SIP account remains active even if you miss one SIP date but after multiple misses, it gets cancelled.
- Can I reduce my SIP amount?
The easiest way to reduce your monthly SIP commitment is by stopping all or a few of them and re-starting a new one with a lower amount.
- How do I cancel my SIP?
If you have started a SIP online, cancel SIP option is available for upcoming transactions. In case you have started a SIP by visiting a branch, you will have to visit the branch or connect with a relationship manager to have the SIP cancelled.
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