There are some mutual funds that allow flexible SIPs. Kotak has one that is tied to the market valuation such as Nifty 50 P/E ratio. If markets more expensive, you invest less and if markets are cheaper then you invest more, say 2–3 times the normal SIP instalment.
Issues with these are:
- You don’t know how much SIP you are actually making.
- You may not have enough cash in bank when the SIP tries to push a bigger installment.
A better solution is one that gives you flexibility and control.
Solution available on Jama.co.in with Direct Mutual Funds:
- Go for one or more automated SIPs that invests a fixed amount every month. This could be say Rs 5,000 per month. It is very easy to setup an automated SIP on a platform like Jama.co.in .
- Choose an e-Mandate if you have an Aadhar linked bank account. This is fast.
- Or use Net Banking to setup a biller mandate
- Use a manual SIP or a pay as you go SIP. This will not auto pull your money from the bank account. You will be sent a payment request each month and you can pay it using either the eMandate or by cheque/net banking/NEFT.
- You can also add a Systematic Transfer Plan to this solution. Just push ‘surplus’ funds into a liquid fund and start a transfer plan from it into the desired equity fund. When you wish to invest more equity, simply tap the STP to make more investments.
This combination keeps things simple and flexible for you and more importantly under control.
Two bonus tips:
- Invest more when markets are cheaper. This may need taking help of an unbiased advisor. Do not fall for ‘free’ platforms that may have a hidden agenda about you or your money.
- Avoid any broker or distributor who takes control of your money and then from that ‘pool’ allows you to invest different sums of money into a mutual fund. This is costly as they will only sell regular plans to you, which means hidden commission. In the long run, people tend to lose about 40% of total corpus by doing regular plans.
