Investing in mutual funds through SIP (Systematic Investment Plan) has increased rapidly in the last few years. However, despite this, most investors know only 1 type of SIP. That is Monthly SIP. But do you know that there are 6 types of SIP? If not, then it will be beneficial to know. You can get higher returns on mutual fund investment by knowing the types of SIP. At the same time, it is not wise to do SIP without understanding. Therefore, today we are telling you about 6 types of SIP. 

Regular SIP

Most investors invest through regular SIP. In this, investors invest a fixed amount every month. Investors can choose to invest on monthly, 2-monthly, quarterly or half-yearly basis. In this, the amount is deducted from the account on a fixed date. 

(Perpetual) Permanent SIP

As the name suggests, there is no period in a permanent SIP. This means that investors can continue this SIP for as long as they want. Practically investors go for a very long period when they start their SIP. You can stop the SIP whenever you want. One advantage of such a SIP is that you get the benefit of the power of long-term compounding for your investments. Generally, the longest period for continuing a SIP is 40 years.

Flexible SIP

Here, investors can change their investment amount based on a pre-decided formula. The investor can invest a lower amount when the market is high and a higher amount when the market is down. However, you have to invest the minimum, pre-decided amount regularly under all circumstances.

Trigger SIP

Triggered SIPs are triggered by specific market movements. For example, you can set up a SIP every time the stock market falls by 5% in a day. Such SIPs help you time the market and make the best of market trends. However, to use triggered SIPs to your advantage, you need to have a deep understanding of the stock market. 

Top-up SIP

In top-up SIP, you can increase your SIP installment amount by a certain amount depending on your financial situation. Whenever your income increases or you get a job promotion or salary hike, you can use this opportunity to increase your SIP amount by going for a top-up of additional SIP amount depending on your affordability.

Insurance SIP (SIP with Insurance)

In this SIP, investors get insurance protection along with investment. That is, investors get term insurance cover. Under this SIP, many mutual fund houses provide insurance cover to the investor up to 10 times the amount of the first SIP. The cover increases later.