4 types of mutual fund SIPs

Systematic investment plan variants
Systematic investment plans (SIPs) are an effective tool for investing in mutual funds for the creation of long-term wealth. SIPs allow investors to put in fixed amounts at predetermined intervals. Here are the different variants:

Regular SIP
A regular SIP is the plain vanilla variant and the most common type. Here, one can invest a fixed amount at regular intervals, say, monthly or quarterly. A regular SIP is suitable for investors with a consistent investment capacity and long-term investment horizon.


Step-up SIP
Step-up SIPs allow investors to increase the amount periodically. It is ideal for those who expect a rise in their incomes over time or want to accelerate their investments. SIP instalments can be stepped up at predetermined intervals, such as annually or half-yearly.

Flexible SIP
Flexi SIPs offer investors the freedom to adjust the amount according to the ups and downs in the market. The amount of SIP is determined by a pre-decided formula, which enables investors to put in more when the market is low and reduce the amount if the market is at a high.

Trigger SIP
Trigger SIPs allow investors to initiate a SIP instalment based on predefined triggers. These could be based on the market conditions, such as specific index levels or the performance of a fund. When the trigger condition is met, the investment is automatically initiated.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.