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Systematic Investment Plan (SIP)

Systematic Investment Plan (SIP)

Systematic Investment Plan (SIP) is an investment route offered by Mutual Funds wherein one can invest a fixed amount in a Mutual Fund scheme at regular intervals - say once a month or once a quarter, instead of making a lump-sum investment. The installment amount could be as little as INR 500 a month and is similar to a recurring deposit. It's convenient as you can give your bank standing instructions to debit the amount every month.

SIP has been gaining popularity among Indian MF investors, as it helps in investing in a disciplined manner without worrying about market volatility and timing the market.

Systematic Investment Plans offered by Mutual Funds are easily the best way to enter the world of investments for the long term. It is very important to invest for the long-term, which means that you should start investing early, in order to maximize the end returns. So your mantra should be - Start Early, Invest Regularly to get the best out of your investments.

SIP
SIP Calculator SIP FAQs Power of Compounding Prosperity SIP

What are the benefits of a SIP?

SIPs make sure you invest regularly - With a SIP, you set your investing on auto-pilot I.e. a predetermined sum of money is invested on a fixed date for the time frame and period you've selected. SIPs on a monthly basis are the most common.

Start small with a SIP - You can start investing with as little as 500. There is no limit on the maximum you can invest. Every small instalment will contribute to your overall corpus.

SIPs give you flexibility - You can choose your SIP amount, date of debit, frequency of SIP and the period until which your SIP should run.

SIPs allow you to average out investment costs - When you purchase units of a mutual fund, you get each unit at the NAV (price per unit). This NAV depends on the performance of the scheme and is subject to change. So, when you invest periodically through a SIP, for the same amount you could be purchasing units at different NAVs, thus averaging out investment costs. When the NAV is low, you'll get more units for the same amount, and vice versa. Here's an example:

SIP Date SIP Amount NAV per unit Number of units (SIP amount/ NAV)
1st Oct 2018 1000 10 100
1st Nov 2018 1000 10.5 (increased) 95.238 (lesser units)
NA 1000 9.5 (decreased) 105.26 (more units)
Total 3000 300.49
Average cost per unit (Total amount/total number of units) 9.98

Variety of SIPs - Investors have several options when it comes to setting up SIPs. Apart from the regular SIPs, they can choose from Flexi-SIPs and Step-up SIPs too. A Step-up SIP increases your SIP by an amount you fixed at an interval you fix - say if your current SIP is 1000, you can choose to step this up by another 1000 annually. So, from year two, your SIP amount is 2000, year 3 it is 3000 and so on. With a Flexi-SIP, you invest a fixed amount regularly like a SIP, but can invest more when the markets are falling subject to a maximum limit you choose, lesser when markets are rising subject to the minimum investment value of the fund.

Reaching your financial goals is so much easier with a SIP. Start one today, and march one step at a time to wealth.

The Power of Compounding

The power of compounding refers to the potential for your investment to increase in value as earnings, both capital gains and interest, accumulate. This could potentially result in an increase / decrease in the value of your investment over time varying basis the market scenarios.

The effect of compounding depends on three factors:

  • Principal or initial investment
  • Time period you stay invested
  • Rate of return on your investment.

Illustration 1: Principal varies, rate is fixed

Amount Interest/ Return End of year 1 End of year 2 End of year 3 End of year 5 End of year 10
5,000 8% 5,400 5,832 6,299 7,347 10,795
10,000 8% 10,800 11,664 12,597 14,693 21,589
15,000 8% 16,200 17,496 18,896 22,040 32,384
20,000 8% 21,600 23,328 25,194 29,387 43,178

Disclaimer: The amount has been rounded off to the nearest whole number. Interest/return has been calculated annually. The above numbers/examples are used for illustrative purposes only.

The more you invest, the higher your earnings on your principal.Let's see how with a few illustrations, across different time periods.

Illustration 2: Principal is fixed, rate varies

Amount Interest/ Return End of year 1 End of year 2 End of year 3 End of year 5 End of year 10
5,000 4% 5,200 5,408 5,624 6,083 7,401
5,000 7% 5,350 5,724 6,125 7,013 9,836
5,000 10% 5,500 6,050 6,655 8,053 12,969
5,000 12% 5,600 6,272 7,025 8,812 15,529

Disclaimer: The amount has been rounded off to the nearest whole number. Interest/return has been calculated annually. The above numbers/examples are used for illustrative purposes only.

The higher the rate of return on your investment, the more your money compounds.

In both cases, you can see that if you stay invested longer, your money grows more.

Mutual funds are a great way to build wealth. They have the potential to give you higher returns compared to your savings account, spread your investment (diversification), are professionally managed, affordable and easy to get started with. Best part, there's a mutual fund for your every goal.

Prosperity SIP

Prosperity SIP comprises of three steps:

  • Start a monthly SIP in an available open-ended equity/hybrid scheme for a pre-defined period (7, 10, 12, 15, 20, 25 or 30 years).
  • Switch to another (the target) scheme on completion of the SIP period. You can also choose to remain in the same scheme.
  • Start a monthly SWP from the target scheme to your bank account.

  • Disciplined investing for the long-term
  • Goal-based approach to investments
  • Freedom to choose desired tenure
  • Freedom to choose the source and target scheme from our wide range of scheme offerings
  • Automated withdrawals to fund your lifestyle
  • Create Passive Income which can meet various financial needs

From Dream to Destination – A SIP tale of `10,000/month in Sundaram Mid Cap Fund from inception in 2002 leading to a steady monthly income of `30,000/month for 7 years. Your financial future awaits!

SIP
Start Date 01-Aug 02
End Date 01-Jul-17
Tenure of Investment 15 years
Monthly SIP Amount ₹ 10,000
Total Amount Invested ₹ 18.0 Lakhs
Investment Value ₹ 1.5 Crore
XIRR (%) 25.4
SWP
Start Date 01-Aug 02
End Date 01-Jul-17
Withdrawal Tenure 7 years
Investment Amount ₹ 154.5 Lakhs
Monthly SWP Amount ₹ 30,000
Amount Withdrawn ₹ 25.2 Lakhs
Remaining Investment Value ₹ 3.8 Crore
XIRR (%) 15.5

Prosperity SIP Calculator Prosperity SIP

Sundaram Prosperity SIP

Sundaram Prosperity SIP (hereby known as Prosperity SIP) is a product that helps investors build a corpus through monthly systematic investing (SIP) over a period of time (ex.,10 years) and then withdraw a sum monthly (SWP) from it over time to meet their needs.

  1. Start a monthly SIP in an available open-ended equity/hybrid scheme:

    For a pre-defined period of either 7 years, 10 years, 12 years, 15 years, 20 years, 25 years or 30 years. The minimum SIP amount shall be Rs. 2000 and Multiples of Re.1 thereafter.

  2. Switch to another (the target) scheme:

    On completion of the SIP period (the investor can also choose to remain in the same Scheme). Switch on completion of the SIP period will happen as per the then prevailing regulations (T+15 days currently).

    Note: T is the date of the last SIP instalment.

    Option A: Same scheme for SIP and SWP.

    Option B: SIP and SWP will be in different schemes. SIP will be in the Source scheme on completion of the SIP Tenure, the amount will be switched to the Target Scheme at the Applicable NAV at the end of 15 days from the date of the last SIP instalment and SWP will be carried out from the Target Scheme.

    If the Source Scheme is mentioned and the Target scheme is not mentioned, SWP will be registered in the same scheme as selected for SIP.

  3. Start a monthly SWP to your bank account:

    Post the Switch, the SWP will be activated for the pre-selected SWP amount on the application form, or an amount as per the table below in case no amount is specified.

    SIP Tenure Default Monthly SWP
    7 years 1.0 x of the monthly SIP Instalment
    10 years 1.5 x of the monthly SIP Instalment
    12 years 2.0 x of the monthly SIP Instalment
    15 years 3.0 x of the monthly SIP Instalment
    20 years 5.0 x of the monthly SIP Instalment
    25 years 8.0 x of the monthly SIP Instalment
    30 years 12.0 x of the monthly SIP Instalment
    For example: If the initial SIP registered for tenure of 10 years is Rs. 10,000 per month, then the SWP will be Rs 15,000 (1.5x of Rs. 10,000).

Yes, the Investor can choose a different SWP amount from the one given in the table. In case the investor does not fill in any SWP amount, the default amount shall be as per the table mentioned.

Prosperity SIP is available in several equity/ hybrid schemes of Sundaram Mutual Fund.

Scheme Source Target
Sundaram Mid Cap Fund
Sundaram Services Fund
Sundaram Large Cap Fund
Sundaram Flexi Cap Fund
Sundaram Large and Mid Cap Fund
Sundaram Focused Fund
Sundaram Multi Cap Fund
Sundaram Small Cap Fund
Sundaram Dividend Yield Fund
Sundaram Business Cycle Fund
Sundaram Financial Services Opportunities
Sundaram Infrastructure Advantage Fund
Sundaram Consumption Fund
Sundaram Balanced Advantage Fund
Sundaram Multi Asset Allocation Fund
Sundaram Aggressive Hybrid Fund
Sundaram Equity Savings Fund
*The AMC reserves the right to make changes in the list of eligible schemes from time to time. Subject to a minimum application amount of SWP instalment under the respective schemes. The Target Scheme is the Scheme in which the Lumpsum switch and Monthly SWP Scheme shall be registered in.

Prosperity SIP is available under the Regular and Direct Plans of the respective schemes. However, it is available only for the Growth Option.

After registration, the investor cannot change the following particulars under Prosperity SIP: SIP tenure, SIP Source Scheme, SIP Amount, Target SWP Scheme or SWP Amount. However, the investor can modify the bank mandate mapped to the registered SIP anytime during the SIP tenure, by submitting the respective SIP Mandate change form.

Prosperity SIP is available only under the Monthly frequency for both SIP and SWP.

Yes, the investor can choose any date for SIP. In case the chosen date falls on a non-business day or on a date which is not available in a particular month, the SIP will be processed on the next business day.

The SWP date would be the same as the SIP date. In case the SWP date falls on a non-business day of the month, then the transaction will be processed on the next business day.

Post completion of the SIP tenure in the source scheme, the units will be switched to the target scheme (or retained in the same scheme as per Switch option selected), and the SWP will start from the target scheme from the following month on the same day as the SIP installment date.

Yes, the investor can choose the SWP target scheme from any of the eligible schemes under Prosperity SIP. The SWP scheme, if different from the source scheme, will trigger a switch and activate SWP at the end of the SIP tenure. If the SIP and SWP schemes are the same, no switch will be processed and the SWP will continue from the source scheme.

SWP will be processed in the same scheme as opted for SIP without any Switch.

Prosperity SIP will be available on the physical and digital assets (website and mobile app) of Sundaram AMC, as well as the Exchange Platforms of BSE and NSE for Non-DEMAT mode.

Yes, additional Purchase/ Switch-in is allowed under Prosperity SIP source scheme.

The total clear units accumulated through Prosperity SIP (including any SIP Top-up provided for Prosperity SIP) and Additional Purchase/Switch-in will be considered for the switch to the target scheme and the same will be processed on a FIFO basis.

In case of a redemption/switch-out, the SWP will continue until units are available in the target scheme. In case of an additional purchase/switch-in in the target scheme, it will get added to the units available for SWP.

Redemption /Switch outs can be processed in the Source Scheme during the Prosperity SIP's tenure. However, since the units in the folio are impacted by way of outflow i.e. redeemed/ switched-out, then the corresponding Switch and SWP will be discontinued. The SIP alone will continue just like a normal SIP until the completion of the SIP tenure.

Yes, an investor can register multiple Prosperity SIPs in different schemes under the same folio.

Yes, an investor can cancel the Prosperity SIP at any point of time. On cancellation of SIP, the underlying Switch trigger and SWP will get cancelled. Please note, SIP cancellation can be done separately by submitting the request at least 10 calendar days in advance.

Yes, an Investor can start a normal SIP where a Prosperity SIP is registered in a different scheme under the same folio or in a completely different folio. Normal SIP submitted in the folio and scheme of the Prosperity SIP, then the Normal SIP will be registered in the new folio with the same details of the existing folio.

Yes, SIP Top-up and SIP pause is allowed under Prosperity SIP. However, for SIP Top-up, the SWP amount limit would be as per the SWP amount mentioned in the initial Prosperity SIP form or table mentioned.

Yes, exit load in line with the respective scheme features would be applicable in case of redemption or switch-out.

Yes, capital gains tax based on prevailing tax laws will be applicable on switch, and redemptions.

No, a minor cannot register for Prosperity SIP.

Prosperity SIP is not available under DEMAT mode.

In case of 3 consecutive defaults, the Prosperity SIP along with the underlying switch and SWP will be cancelled.

You will need to submit a request to update bank details for your Prosperity SIP debit. Upon such a submission being processed, Prosperity SIP will be debited from the newly registered bank account.

Note: A request for a change in bank details needs to be submitted at least 30 days before the next SIP Debit date.

Yes, the existing OTM in the folio can be used for registering your Prosperity SIP. The SIP amount specified under Prosperity SIP must be less than or equal to the maximum limit in the existing OTM registered.

In case target scheme stops accepting subscriptions/ switch ins, the AMC reserves the right to continue to provide the facility of switch into a different target scheme.

In the case of a merger of the target scheme with another scheme, the AMC reserves the right to continue the SWP from the new target scheme where feasible.

In case of an investor's demise during the SIP tenure, the Prosperity SIP, switch and the SWP shall cease, and the subsequent transmission process shall begin. In case the investor demise is post the SIP tenure/switch, the SWP will cease, and the subsequent transmission process shall begin.

The default target scheme shall be the source scheme and the default tenure shall be 20 years.

Disclaimer: The information included in the"Frequently Asked Questions" section, is for informational purposes only. Investors are requested to read the offer document in conjunction with addendum before investing.