Kotak SIP: Best Kotak SIP Plan

 

Mutual fund SIP plans have emerged as one of the best ways to invest in mutual funds for new investors seeking a long term investment solution. Kotak Mutual Fund AMC is an up and coming mutual fund house that provides investors with the option of Kotak SIP plans in multiple mutual fund schemes that can help new investors save and grow their wealth over time.

SIP: The Basic Premise

SIP stands for Systematic Investment Plan which is a smart and hassle-free mode for investing money in mutual funds over the long term. SIP allows investors to invest a certain pre-determined amount at regular intervals which can be weekly, monthly, quarterly, etc. for a pre-decided period of time. This is a planned approach towards making investments and helps investors inculcate a habit of saving and building wealth for the future.

Rupee-Cost Averaging in SIP

In volatile markets, most investors remain sceptical about the best time to invest and try to time their entry into the market. The rupee cost averaging benefit of mutual funds allows investors to get out of the guessing game. Through SIP investments you gather more units when the price is low and lesser when the price is high. During volatile periods, this strategy potentially allows investors to achieve a lower average cost per unit as well.

SIP’s Power of Compounding

The rule for compounding is simple. Sooner one starts investing, the more time the money has to grow.

Here is an example to understand it clearly –

If one starts investing Rs. 10,000 per month on one’s 40th birthday, in 20 years time the investor would have put aside Rs. 24 lakhs. This would be worth Rs. 52.4 lakhs when the investor reaches 60 years of age if the investment grew at the rate of 7% per year.

However, if one started investing 10 years earlier, the same Rs. 10,000 per month would add up to Rs. 36 lakhs over 30 years. Assuming the same annual growth at the rate of 7%, the investor would have Rs. 1.22 Cr on his/her 60th birthday. This is more than double the amount that the investor would have received when he/she started ten years later. This is the power of compounding which can be achieved through SIP investments.

Types of SIP:

While offering an SIP facility, fund houses have been quite receptive to what investors want. This has caused the SIP to evolve over the years. Here is an explanation of types of SIP available with Kotak Mutual Fund AMC.

• Step-up SIP or Top-up SIP: This is also known as Top-up SIP. This SIP enables investors to increase the SIP amount at regular intervals. This is helpful in goal planning when investors have a windfall income or receive a bonus that could be invested. This way, investors can start with a small amount initially and gradually increase the amount. Therefore, increasing investments overtime will protect investors in case of emergencies while ensuring long term benefits of increase in income.

Many a times, investors continue the same monthly investment through SIP for over a long-term. Though they earn good returns on such investments, they might miss out on the opportunity of earning an additional income if they had topped up their SIP. Increasing the SIP amount periodically is an easy way to build wealth further in the future.

• Flex SIP: This is the flexible SIP. At times if investors do not wish to opt for SIP due to uncertain cash flows concerns, they can opt in for flex SIP and still stay invested. With this, investors can adjust instalments as per the financial capacity of the investor. Investors can also opt for a trigger-based option. For instance, with the help of Flex SIP, investors can allocate the investible surplus directly into one of the funds of their existing portfolio if they are rewarded by a bonus or other windfall. This gives investors the flexibility to either increase or decrease the amount in any particular month.
• Trigger SIP: This facility is more viable for experienced investors as it involves a higher degree of awareness and knowledge of financial markets. With Trigger SIP, investors can set either an index level, NAV, date or an event when the investment will be made. This comes in handy when one wishes to take advantage of any anticipated event. For instance, if an investor knows a certain kind of Government policy is due next week and it will impact the index/mutual fund crossing a certain mark, this can be set as a trigger for making the investment. Similarly, investors can set trigger targets for fund NAV to make a trigger SIP investment.
• Perpetual SIP: While signing up a SIP mandate, investors must enter a start and end date. This is usually a pre-decided SIP tenure which can be a year, 2 years, 3 years or 5 years. Once the SIP tenure is completed, many a times, investors tend to procrastinate and delay renewal of the investment. As a result, they end up missing a few SIP instalments which tends to upset the saving discipline and potentially affects scheme returns in the long run.
• Pause SIP: In the times of a financial crisis, investors can even pause SIP instalments instead of stopping them altogether. This will not impede their path to systematic wealth creation. By doing so, investors do not have to undergo the process of re-starting their SIPs all over again. As per current rules, investors can pause SIP investments for a period of 1 month to 3 months. This will give much needed relief to investors during those few months of financial distress.

Key Steps to Pause Existing SIPs:

1. Submit the pause form to the fund house and send an instruction. The form can be downloaded from the fund house’s official website or sourced from the Investor Service Centre.
2. Submit a Bank Mandate. Once the pause form is submitted, you also need to instruct your bank to stop the auto debit service or post-dated cheques. Once these instructions are placed correctly, the regular SIP payouts will be stopped from the next payout onwards.

One needs to keep in mind that not all fund houses offer the Pause-an-SIP facility. Therefore, it is best to check whether this option is available at the time of registration. Also, do not forget that pause facility is usually offered only once during the tenure of the SIP investment.

Benefits of Kotak SIP:

Some key benefits of Kotak SIP plans are given below.

• Disciplined Saving: Discipline is the key to ensure successful investments. When one invests through Kotak SIP, the investor commits to save regularly. With every monthly investment the investor comes closer to attaining their financial objectives.
• Flexibility: though it is advisable to continue a SIP with a long-term perspective, there is in fact no compulsion either. Investors can discontinue the plan at any given point of time (except equity linked savings scheme dues to a lock-in period). On the other hand, flex SIP also allows increase to increase/decrease the amount being invested as per market conditions/personal financial situations.
• Long-Term Gains: With the added advantage of rupee-cost averaging and compounding, SIPs have the potential to deliver attractive returns over a longer investment horizon.
• Convenience: SIP is an easy mode of investment. Investors can issue a standing instruction to the bank and facilitate auto-debits from their bank account.

Here is a List of Top Kotak SIP Plan to Invest in FY 2019-20

Scheme Name	NAV	1Y Return	3Y Return	5Y Return
Kotak India EQ Contra Fund Growth	59.87	14.92%	16.78%	11.14%
Kotak Standard Multicap Fund Growth	39.45	14.06%	15.37%	12.39%
Kotak Bluechip Fund Growth	268.11	18.65%	13.97%	10.08%
Kotak Tax Saver Scheme Growth	50.28	16.76%	13.73%	11.11%
Kotak Equity Opportunities Fund Growth	134.97	17.35%	13.63%	11.56%
Kotak US Equity Fund Growth	18.89	15.41%	12.26%	10.49%
Kotak Emerging Equity Scheme Growth	42.74	10.73%	11.78%	12.60%
Kotak Global Emerging Market Fund Growth	17.36	13.58%	8.90%	4.02%
Kotak Small Cap Fund Growth	77.74	6.97%	7.81%	10.01%
Kotak Infrastructure & Economic Reform Fund Growth	21.57	8.05%	7.75%	7.38%

Kotak SIP Investment Details:

Key details about SIP investment options available from Kotak Mahindra Mutual Fund AMC are as follows*:

Particulars	Details
Minimum Investment Amount	Rs. 1000 in general and Rs. 500 in the case of Kotak Select Focus Fund and Kotak Equity Arbitrage Fund. The amount can be increased in the multiples of Rs. 500 for Kotak Tax Saver scheme, while other schemes can have different threshold amounts.
Minimum number of Instalments	6 (can be higher in case of some schemes)
Frequency	Monthly or Quarterly
Choice of payment dates available	1st, 7th, 10th, 14th, 15th, 21st, 25th, 28th and 30th.
Available Schemes	Open-Ended schemes except Kotak Liquid Scheme, Kotak Floater Short Term Scheme & Kotak Flexi Debit Scheme

*Data provided is illustrative and not exhaustive while being subject to periodic change as per fund house/fund management decisions.