The Battle Between SIP and Luxury

Customers are delaying buying luxury cars because they want to keep investing through systematic investment plans, according to Santosh Iyer, who will take over as the CEO and MD of Mercedes-Benz India in January, in an interview with The Times of India. SIPs are a common approach to investing in mutual funds (MFs), particularly equity MFs. Iyer wants to make the point that instead of purchasing pricey cars, people prefer to keep investing in MFs through SIPs. The SIPs are “our rivals”, according to Iyer.

The Battle Between SIP and Luxury.
The Battle Between SIP and Luxury. Image from

Types of SIPs

Regular SIPs

Regular SIPs are the most straightforward variety of Systematic Investment Plans, as their name suggests. You are expected to contribute to this plan on a consistent basis, which may be monthly, bimonthly, quarterly, or half-yearly. After that, the contributions you make are placed in the mutual funds of your choice. You can select the term, the contribution amount, and the frequency when you open this SIP online. The contribution amount, however, cannot be altered after you’ve made your decision.

When should one select this kind of SIP?

Regular SIP investments are an option if you’re just beginning your stock market journey. Alternatively, if you are clear about your investment horizon and your financial objectives, choosing to invest in such a SIP can be the best option.

Flexible SIP

A flexible Systematic Investment Plan, sometimes known as a “flexi SIP” is quite similar to a traditional SIP. The size of the investment is the sole factor that separates the two, though. In a flexible plan, you are always free to change or modify the contribution you desire to make. Flexi SIPs provide you with more control over your investments than a conventional plan because you can modify the contribution amount.

When should one select this kind of SIP?

A flexible SIP may be a smart choice if you would want to have more control over the SIP and be able to modify your investment in response to market movement. If the markets are doing well, for instance, you can increase your contribution while lowering it when the markets are performing poorly.

A flexible SIP, on the other hand, can be the best choice for you if you don’t have a consistent income stream or are prone to occasional financial difficulties. According to your current financial status, you can choose to cut or raise the amount.

Top-up SIP

This kind of Systematic Investment Plan, also known as step-up SIP, enables you to raise your contributions at specific predetermined intervals.

For instance, with a top-up SIP, you can begin by contributing Rs. 5,000 each month and direct the fund house to increase the amount of contribution by Rs. 1,000 every six months till the end of the period.

As a result, you will contribute Rs. 5,000 per month for the first six months of the SIP and Rs. 6,000 per month for the following six months. The SIP tenure continues after this.

When should one select this kind of SIP?

For salaried people receiving frequent yearly or biannual raises, a top-up SIP is an ideal choice. With no need for manual intervention, this enables you to automatically raise the SIP payments in accordance with your wage increase.

Moreover, advance For people who have recently begun working, systematic investment plans could also be a smart alternative. Starting with a modest investment amount, you might gradually increase it each year when you get a rise in pay.

Trigger SIP

Trigger Systematic Investment Plans make online investments in mutual funds only when a predetermined event takes place. An index level, a NAV level, or even favorable market moves could represent this specified event. To start investing only if a mutual fund’s NAV level drops below a specific level, for example, you could set up a trigger SIP.

When should one select this kind of SIP?

For trigger SIPs, extraordinary degrees of market savvy and understanding of market dynamics are needed. Because of this, you should only choose this type of Systematic Investment Plan once you have sufficient stock market knowledge and skill.

Perpetual SIP

A perpetual SIP has no specified duration whatsoever, as the name implies. As long as the person keeps making consistent contributions, the investment plan will continue. It only comes to an end after the investor gives the fund house the command to halt. Between a perpetual SIP and a normal plan, there is only one significant distinction.

When should one select this kind of SIP?

A perpetual SIP may be the best option if, as an investor, you have no set objectives or time horizon in mind. It gives you the freedom to hold onto your investments for as long as you like and the ability to redeem them as necessary.

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What is a SIP?

A Systematic Investment Plan (SIP), also referred to as SIP, is a service provided by mutual funds to help investors make disciplined investments. An investor may use the SIP capability to make a single investment in the mutual fund scheme of their choice at regular periods.

Have people in India been choosing to invest in SIPs over luxury cars?

Yes. They have.

Who is going to take over as CEO of Mercedes-Benz in January 2023?

Santosh Iyer.

Does Iyer call SIPs “rivals” of the luxury car industry?

Yes. He does.

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