Choices

Thinking of Investing in a Mutual Fund ...these are your choices

i) SIP - Systematic Investment Plan

In this mode , you decide to invest a fixed amount , on a fixed day of every month , in a Mutual Fund of your choice. The advantage of this method is , you would endup buying more units when the markets are down ( and hence NAV of the MF is low ) and also that it would help develop a sense of discipline in investing .

ii) VIP - Value Investing Plan

In this mode , the amount you invest every month varies , you would specifie a range ( say Rs.2000 to Rs.5000) ,Mutual Fund company would invest more when the markets are down hence buying more Mutual Fund Units when markets are low and buying less when the markets are high , thus averaging your buys. Even in case of VIP , you would need to specify a day of month and the fund scheme to invest in . Benchmark AMC provides this mode for investing.

iii) STP - Systematic Transfer Plan

In this mode you invest a lumpsum amount , a one time investment into a debt fund ( a mutual fund , which does not invest in stocks ) and then you instruct the Mutual Fund to transfer a fixed amount to a choosen Equity Mutual Fund scheme on a fixed day of the month .Advantage of this mode is that instead of keeping the amount in a S.B account and earning about 3.5% interest , in a debt fund you may earn a higher rate of interest and still keep investing the money in a phased manner in a Equity Mutual Fund , which could earn you higher returns in the longer term.

iv) Flex - STP (Flexible - Systematic Transfer Plan)

This mode is exactly like a normal STP , but instead of a fixed amount that gets transfered or invested each month like a SIP, a variable amount gets invested each month like a VIP. currently HDFC AMC provides this mode for investing.

v) FLEX-INDEX (Flexible Index Plan)

This is another mode very similar to STP , but instead of a amount being transfered for investing every month , the trigger for transfer or date when the investment takes place is when the Index say NIFTY or SENSEX reaches a certain level . When we want to use this mode , we would need to specifiy the Index level and % of the total money to be invested at each of these levels . All these levels and % specified would be valid only for a year from date of enrollment . If during this time interval , those index levels are not reached, then no amount would be invested .This is one more of HDFC AMC's scheme.

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