Brief Introduction to SIP
SIP stands for Systematic Investment Plan which is a smart and hassle-free mode for investing money in mutual funds. Reliance SIP allows investors to invest a certain pre-determined amount into a mutual fund of his/her choice at regular intervals which can be weekly, monthly, quarterly, etc. This is a planned approach towards investments and helps investors inculcate the habit of saving and building wealth for the future through small investments made over a longer period of time.
Benefits of Nippon India SIP:
Some key benefits of Nippon India SIP are as follows.
- Disciplined Saving: Discipline is the key to successful investments. When one invests through Reliance SIP, one commits to saving regularly in smaller amounts over a longer period of time. With every Reliance SIP investment, the investor comes closer to attaining their financial objective such as the creation of large retirement corpus around two decades down the line.
- Flexibility: It is advisable for investors to continue their SIP with a long-term perspective but there is no compulsion regarding this Investors can redeem their investment at any given point of time in the future (except in case of equity linked savings scheme due to a 3 year lock-in period). On the other hand, one can opt for a flex SIP that allows investors to increase/decrease the amount being invested as per their requirement/financial situation.
- 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. As investing through a Reliance SIP increases the possibility of an investor staying invested in the scheme for a longer period, these systematic investments have superior ability to benefit from the power of compounding.
- Convenience: SIP is an easy mode of investment. One can issue a standing instruction to your bank and facilitate auto-debits from your bank account. An investor can complete the entire process starting from fund selection to scheduling/redemption of the Reliance SIP investment online from the convenience of his/her home or office.
Also Read: Which SIP is best for 3 years?
How SIP Works:
SIP operates as a flexible and easy investment plan. The designated amount for the systematic investment is auto-debited from the investor’s bank account and invested to a pre-determined mutual fund scheme. The units are allocated on the basis of the applicable Net Asset Value (NAV) for the day. Since each SIP is counted as an individual investment, with each systematic investment, additional units are purchased and added to the investment account at the applicable NAV. As units are bought at different rates (usually both high and low), investors benefit from Rupee-Cost Averaging and the Power of Compounding.
Defining Rupee-Cost Averaging Benefit
In volatile markets, most investors are unable to identify the best time to invest and try to time their entry into the market. Rupee-cost averaging allows investors to get out of the guessing game. Being a regular investor, the principal gathers more units when the price is lower and lesser units are bought when the NAV is higher. During volatile periods, it may allow investors to achieve a lower average cost per unit as well.
How Power of Compounding works?
The rule for compounding is simple. Sooner one starts investing, the more time ones money has to grow.
Here is an example to understand it clearly –
If an investor starts investing Rs. 10,000 per month on his/her 40th birthday, in 20 years time, the investor would have put aside Rs. 24 lakh. It would be worth Rs. 52.4 lakh when he/she is 60 years old, if the investment grew at the rate of 7% per year.
However, if he/she had started investing 10 years earlier, your Rs. 10,000 per month would add up to Rs. 36 lakh over 30 years. Assuming the same annual growth at the rate of 7%, one would have Rs. 1.22 Cr on their 60th birthday. This is more than double the amount an investor would have received if he/she had started ten years later. This is the power of compounding which can be achieved through SIP.
Types of Nippon India SIP
While offering SIP facility, Reliance Mutual Fund AMC has been quite receptive to what investors want. This has led the concept of SIP to evolve over the years. Here is an explanation of the different types of SIP available at different fund houses.
- Step-up SIP or Top-up SIP: This is also known as Top-up SIP. This SIP enables investors to increase their SIP amount at regular intervals. This is helpful in making goal-based investments where one has a windfall or receives a bonus that he/she wishes to invest. This way, one can start with a small amount initially and gradually increase the amount over time. This increase in investments will protect investors on rainy days as over time expenses also increase alongside
Many a times, investors continue the same monthly investment through SIP for over a long-term. Though they earn good returns on the investment but they miss out on the opportunity of earning an additional income if they had topped up their SIP regularly. Increasing the SIP amount over time is an easy way to build wealth and reach a predetermined investment goal.
- Flex SIP: This is a uniquely flexible SIP. At times if one does not wish to opt for SIP due to uncertain cash flows, one can opt in for flex SIP and still stay invested. With this, an investor can adjust his/her SIP instalments according to their changing financial An investor can also opt for a trigger-based option. For instance, with the help of Flex SIP, one can allocate the investible surplus directly into one of the funds in ones existing portfolio. This provides 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 some amount of awareness and knowledge regarding workings of the financial sector. With Trigger SIP, one can set either an index level, NAV, date or an event to initiate/stop a Reliance SIP. This comes in handy when one wishes to take advantage of any anticipated event. For instance, if one knows that a certain kind of government policy is due next week and it will impact the index crossing at a certain mark, one can set it as a trigger date. Similarly, an investor can set a trigger target for ones fund NAV appreciation/depreciation or capital appreciation/depreciation trigger for the SIP as well.
- Perpetual SIP: While signing up a SIP mandate, one is usually required toenter a start and end date. This pre-decided SIP term can be a year, 2 years, 3 years, or longer. However, once the SIP tenure is completed, many a times, investors tend to procrastinate and delay renewal due to operational hassles. As a result, they end up missing a few installments which upsets the saving discipline and affects returns in the long run. By means of a perpetual SIP, this opportunity to ensure long term returns is prevented as the SIP continues automatically till it is stopped by the investor.
- Pause SIP: In times of financial crisis, investors can even pause Reliance SIP installments instead of stopping the SIPs altogether. Using this functionality will not impede ones path of systematic wealth creation. By doing so, investors do not have to undergo the process of re-starting their SIPs all over again. One can pause SIPs for a period of 1 to 3 months and this will give them much needed relief for those few months under financial distress. At a later date, one can un-pause the SIP and investments start up automatically. One should however remember that this option is available only for a limited number of times during the tenure of the Reliance SIP.
Here are the key steps to pause one’s Nippon India SIP:
- Submit the pause form with Reliance Mutual Fund AMC and send an instruction to pause your current SIP. This form can be downloaded from the fund house’s official website or sourced from the Investor Service Centre of Reliance MF AMC.
- Submit a Bank Mandate. After the pause form is submitted, one also needs to instruct the bank to stop the auto-debit service or issue a stop request for post-dated cheques that have already been submitted. Otherwise the bank may charge you for cheque/ECS bounce.
Here is a List of Top Nippon India SIP Plan to Invest in FY 2019-20
|Scheme Name||NAV||1Y Return||3Y Return||5Y Return|
|Nippon India Us Equity Opportunities Fund Growth||17.81||21.25%||18.89%||–|
|Nippon India Banking Fund Growth||304.08||15.63%||16.35%||12.10%|
|Nippon IndiaValue Fund Growth||78.78||9.44%||12.65%||9.13%|
|Nippon India Large Cap Fund Growth||37.13||7.14%||14.08%||9.58%|
|Nippon India Multi Cap Fund Growth||102.27||6.06%||12.33%||6.62%|
|Nippon India Small Cap Fund Growth||40.86||-3.11%||9.73%||11.81%|
|Nippon India Quant Fund Growth||26.83||9.98%||10.67%||5.28%|
|Nippon India Focused Equity Fund Growth||49.5||8.83%||10.09%||9.75%|
|Nippon India Power and Infra Fund Growth||100.01||1.40%||8.81%||5.50%|
|Nippon India Japan Equity Fund Growth||14.92||16.21%||11.33%||8.87%|
|Nippon India Tax Saver Fund||57.77||3.38%||5.72%||4.67%|
|Nippon India Liquid Fund||4755.27||7.08%||7.07%||7.53%|
|Nippon India Equity Hybrid Fund||59.4||6.47%||10.04%||8.95%|
FAQs on Nippon India SIP
Ques: Which Nippon India SIP is the best?
Ans: Following are the top 3 best Nippon India SIPs-
- Nippon India Us Equity Opportunities Fund Growth
- Nippon India Banking Fund Growth
- Nippon IndiaValue Fund Growth
Ques: How can I start SIP in Nippon India Mutual Fund?
Ans: In order to start an SIP with Nippon India Mutual Fund, you must log in to the portal. Complete your KYC with the AMC and then Register yourself on the portal. Select the fund that you wish to invest in, choose the investment mode as SIP. Considering your financial condition, choose a suitable SIP amount for yourself, select the time period for installments (could be monthly, quarterly or annually) and then click on ‘Start SIP’.
Ques: What is the minimum amount I can start a SIP with?
Ans: You can start an SIP with Nippon India with a minimum amount of Rs. 100.
Ques: How do I cancel my Nippon India MF SIP online?
Ans: In order to cancel your Nippon India MF SIP online, you must log in to your mutual fund account and click on ‘Cancel SIP’. Kindly note that it will take around 30 days for the SIP to cancel. If you have invested in the SIP through an agent, you must cancel the SIP through the agent’s portal.