I choose for a 30-year SIP?
Investing in the Indian stock market through Systematic Investment Plans has been gaining popularity of late. Wondering what an SIP is?
A Systematic Investment Plan, or SIP for short, is a method of investing, whereby you are required to make regular contributions of a fixed amount for a certain period of time. Once a specified tenure ends, you can withdraw the amount in the fund and use it as you wish. These contributions are invested in individual stocks of companies or mutual funds.
You may be wondering how long you can invest in an SIP, aren’t you? In this article, we’ll examine whether you can invest in an SIP for a long time, like 30 years or more.
Can you invest in an SIP for 30 years or more?
Systematic Investment Plans usually require you to complete an application form when you begin investing. In the application form, you will be asked to specify the duration of your investment. In general, the most common tenures for mutual funds are 5 and 10 years. However, depending on the mutual funds you wish to invest in, fund houses may even allow you to invest for longer durations.
However, what if you want to invest in a SIP for longer than those tenures? Like say 30 years? Will you have to open a new SIP once the previous one expires? Not at all.
Here is where the concept of perpetual SIPs comes into play. As the name implies, perpetual SIPs have no end to their tenure. When you fill out your application form, you can choose perpetual SIPs. You don’t have to worry about tenures at all with perpetual SIPs. You can stay invested as long as you want.
Can I close a perpetual SIP at any time?
There are no restrictions on closing a perpetual Systematic Investment Plan. You can even withdraw funds after just a few months without incurring any penalties.
Conclusion
With a perpetual SIP, you can invest for as long as you want, but also exit the investment at any point you want. This makes it the perfect option for individuals looking for long-term wealth creation.
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First published on 26 June 2023. This article is for general information and education only. It is not investment, tax or legal advice, and it is not a recommendation to buy or sell any product. Rules, tax rates and product features may have changed since it was written; check the current position before acting.
