If you are looking to invest in country in the Asian Region, more specifically in Singapore or Thailand, then you might want to keep yourself informed about the various types of investment plans. An example of such is the Systematic Investment Plan or SIP. It is a hassle-free and smart way to invest your money in portfolio investments like the mutual fund. You can invest in particular pre-determined amount at regular intervals, be it weekly, monthly or quarterly. Because it is structured as a planned approach towards investments, you will be able to instill within you the habit of building your wealth for the future. There are four major types of SIP and these are the Flexible SIP, Trigger SIP, Top-up SIP and the Perpetual SIP. Each has their own unique way of helping your investments grow.
This kind of SIP allows you to increase or decrease your SIP amount based on your present cash flow. Meaning, the amount you invest would largely depend on the amount of disposable income you have. This way, when you slip into financial difficulties for one reason or another, you can always skip paying a number of your SIP installment until your financial situation becomes normal again. On one hand, if you are able to receive a windfall, such as an incentive or bonus for a job well done, you can always deposit either part of the amount you receive or all of it into your SIP account.
This particular type of SIP is best for those who already have working knowledge and are highly aware about what’s happening in the financial markets. You may either set your preferred index level or a particular date to start with this SIP. Be aware though that this SIP type may not be that desirable, especially for newbie investors as it promotes speculation and betting on an event. That is something that only a seasoned investor can do.
This kind of SIP gives you the opportunity to increase your investment amount regularly. Such feature allows you to fully gain from a mutual fund scheme, particularly if it is performing exceedingly well. In such situation, you can increase the amount you contribute at regular intervals. If you were granted a salary raise or perhaps are able to add another income stream to your regular earnings, you will be able to invest bigger amounts perpendicular to the rise in your income under this SIP type.
Under normal circumstances, you would have to agree to an SIP mandate for a year or three years or maybe even more. Perpetual SIP type, however, allows you to invest without having to specify the end date in your SIP mandate. This gives you the option to redeem your investment at any time or when your investment goals have been achieved. Nevertheless, if you are a newbie investor, you might want to first begin with a fixed-period SIP as it will help you achieve financial discipline and also help you nurture a goal-based approach.
All four types of Systematic Investment Plans have their own specific benefits. While one SIP type may offer more than the other, it does not automatically mean that is the best one for you. It is important to learn the type you prefer and see if it matches your expectations.