MOST people think of systematic investment plans (SIPs) while investing in equity funds. But this route has multiple uses and can be relevant to other modes of investment too. It is necessary thus to look beyond equities. For example, there are debt funds. The SIP route can be used to invest in these funds. Here are some factors that should be considered.

Regular investing: One reason why an SIP may be adopted to invest in a debt fund is that this lets you invest on a regular basis. This has more to do with the fund flow available with the individual. When this happens, the amount has to be invested and this is possible only by using the SIP route as this introduces an element of regularity into the whole process. The worry otherwise is that there may be times when the investor forgets to invest the amount and the process may be disrupted. The benefit of rupee cost averaging present in case of equity funds might not be as relevant in this case.

Build up of capital: The manner in which the situation plays out is like this: There is a slow-build up of capital over a period of time because of regular investments being made.

This ensures that there is a slow but steady movement towards the investor's goals. As for debt funds, they should not be considered a route where investment should only be a lump sum as there are other ways in which the individual can achieve that.

This is significant because there has to be moves whereby the individual investor sees that there is growth towards the goal and that he is actually contributing to the process in an effective manner.

No lock-in: One of the best features of the entire process of investing through the SIP route is that this provides additional benefits, compared to other routes. One way in which the individual would actually go about the process is to invest in a recurring deposit scheme.

But there is a problem here, as the individual would have to invest for a fixed time and the total amount would be available only after this point of time. On the other hand, when the debt fund route is used, the restriction on taking out funds is removed and this provides an element of comfort for the investor. There is also no lock-in when the debt fund has been selected though the investor has to be aware that there could be an exit load that is levied in several schemes for withdrawal before a specified date.

Time periods: There is a lot of flexibility that the investment in the debt fund SIP will provide. The situation might be slightly restricted in case of an equity-oriented mutual fund, as this would have to be done for the purpose of long-term accumulation of funds. However, when it comes to a debt fund then even medium or shortterm investment goals can be met using this route.

The choice is wider and hence the investor can ensure that he is able to meet a variety of situations when he uses the route of making the SIP . This is something that adds a lot of value and hence has to be considered in detail.

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