Investment is the key to financial security.
Among various investment options, a mutual fund is one where your money is invested under the supervision of an experienced fund manager. You have two options to enter a mutual fund, one through lump sum investment and the second, through a systematic investment plan (SIP).
A systematic investment plan (SIP) is a growing tool of financial independence, that helps you to create wealth, by investing small sums of money every month in a mutual fund, over a period of time.
SIP helps you take the advantage of two most important investment strategies, that is rupee cost averaging and power of compounding. Moreover, SIP helps you to develop a disciplined approach to investing.
It has been more than a decade and a half since Franklin Templeton introduced the concept of SIPs in India.
Since then, SIPs trump most other mutual fund plans when it comes to wealth creation.
A mutual fund in itself has subsided other investment options as it gives an opportunity to beginners to enter the market with the desired level of risk.
Everyone has different financial priorities at different stages of life.
While you are busy planning your present financial needs, it is also important to plan your future financial requirements and it is a necessity to secure your family’s financial health at the onset of any unforeseen condition.
Mutual fund houses provide an additional facility of life insurance cover to their investors who invest via SIPs. These are known by different names, SIP Plus, Century SIP, or SIP Insure, such schemes have been there in the market for a long.
SIP helps you save and grow your money over a period of time.
Investing regularly for a long duration can help you accumulate a sizeable corpus through the compounding effect.
SIP is a perfect tool for people who have a specific, future financial requirements.
By investing a specific amount every month; you can plan and may meet your financial goals, be it your child's education, marriage, or comfortable post-retirement life.
Having an adequate corpus to invest in is a good habit.
But what is the use of money if you can’t use it when needed? Systematic investment plan is one of the most liquid forms of investments and it can save you from a financially sticky situation when required.
This is a large cap equity-oriented mutual fund scheme that helps to generate long-term capital appreciation. It has a moderately high risk with an above-average return trend. The fund has generated the maximum returns when invested via SIP.
It is a multi-cap equity-oriented mutual fund growth scheme that aims for long-term capital growth. It has a moderately high risk with an average return. It has a diversified portfolio with primary investment in the banking sector.
This scheme also provides an optional feature of “Century SIP” that is, it provides a life insurance facility to the investors entering via SIP.
It is an equity-linked saving scheme (ELSS) with the objective of long-term growth of capital. The investment amount in this scheme is eligible for deduction from the total taxable income up to a maximum amount of Rs.1,50,000.
To add to the list of benefits, this scheme also provides an optional facility of life insurance as this is covered under the “Century SIP” feature.
It is a large cap equity-oriented mutual fund that focuses on generating long-term capital appreciation as well as consistent returns. The risk of volatility is very less as the portfolio consists of equities of big companies and the facility of insurance makes the scheme more appropriate for an investor with a low-risk profile.
It is a small cap-oriented fund and has an investment objective to seek long-term capital appreciation by investing in equity and related securities.
This is one of the best-rated small cap funds and is suitable for slightly aggressive investors. The fund was launched on 2nd January 2013 and has an expense ratio of 1.29%. It has given a return since the launch of 20.74%
Before deciding on whether to invest in mutual fund schemes with life cover, let us look at how it works.
Once you have decided the SIP amount, then life cover in the first, second and third year will be a specific multiple of the SIP amount, which could be 10, 20, and 30 times, respectively.
For example, if the monthly SIP is of Rs.5,000, then the life cover for 1st, 2nd and 3rd years will be Rs.50,000, Rs.1,00,000, and Rs.1,50,000 respectively.
Further, every scheme has a different coverage amount and age, till which the benefit can be availed.
Thus, by smart investment choices, you can grow your money as well as protect yourself from the uncertainty of the future. It is a good choice to invest in a SIP and secure your family’s future.
But, before choosing the SIP scheme to invest in you should go through the insurance terms very carefully, the maximum coverage amount, the age till it covers the charges, how to redeem the insurance claim, etc.
In the end, SIP is an investment option to grow your money and not to insure your future. This is just an additional facility that is provided by mutual fund houses. So, don’t just invest in a SIP because of free life insurance.