Table of Contents
What is an Equity SIP?
How to place Equity SIP order?
How does an Equity SIP work?
What are the benefits of Equity SIP?
Is Equity SIP the same as Mutual Fund SIP?
Who should invest in Equity SIP?
What is the minimum investment amount in an Equity SIP?
What is meant by "Frequency"?
Can I place Equity SIP Request for Sell transactions?
Can I change the stock or the investment amount in an Equity SIP?
What happens if I miss a payment in my Equity SIP?
Is there a lock-in period for Equity SIP?
What is an Equity SIP?
An Equity SIP is a systematic method of investing a fixed amount regularly (daily, weekly, forth-nightly or monthly) in equity shares, similar to how mutual fund SIPs work. Instead of investing in mutual funds, Equity SIPs allow direct investments in specific stocks over time.
How to place Equity SIP order?
To Place Equity SIP order follow below steps,
- Go to place order
- Select order type as SIP Order
- Select Quantity / Amount
- Choose frequency
- Select No. of installments
- Select SIP start date
- Click on Place order
- Agree Terms & Conditions
- Confirm the order
How does an Equity SIP work?
In Equity SIP, you have the option to set up either a Quantity-based SIP or an Amount-based SIP. Here’s how each works:
1. Quantity-based SIP:
In a Quantity-based SIP, you decide to purchase a fixed number of shares of a particular stock at regular intervals (daily, weekly, forth-nightly & monthly). The investment amount may vary depending on the market price of the stock on each investment date.
Example:
- Suppose you set up a Quantity-based SIP to buy 5 shares of a company every month.
- If the price of the stock in Month 1 is ₹200, you will invest ₹1,000 (5 shares x ₹200).
- If the stock price increases to ₹250 in Month 2, you will invest ₹1,250 (5 shares x ₹250).
- As the stock price fluctuates, the total amount you invest will vary, but the number of shares remains constant.
2. Amount-based SIP:
In an Amount-based SIP, you invest a fixed sum of money at regular intervals, and the number of shares purchased depends on the stock's price at that time. If the stock price is lower, you buy more shares; if it’s higher, you buy fewer shares.
Example:
- Suppose you set up an Amount-based SIP to invest ₹1,000 every month in a particular stock.
- If the price of the stock in Month 1 is ₹200, you will purchase 5 shares (₹1,000 ÷ ₹200).
- If the price increases to ₹250 in Month 2, you will purchase 4 shares (₹1,000 ÷ ₹250).
- In Month 3, if the price drops to ₹150, you will purchase 6.66 shares (₹1,000 ÷ ₹150).
What are the benefits of Equity SIP?
- Cost Averaging: Regular investment helps average out the cost of buying stocks over time, reducing the impact of market volatility.
- Discipline: It encourages disciplined investing by making it a habit.
- Convenience: Investors don’t have to time the market, as investments are automatic.
- Wealth Creation: Long-term systematic investments in equities can generate significant returns.
Is Equity SIP the same as Mutual Fund SIP?
No. While both are systematic investment plans, in Equity SIP, you are directly purchasing shares of companies, while in Mutual Fund SIP, you invest in units of mutual funds, which in turn invest in a diversified portfolio of stocks, bonds, etc.
Who should invest in Equity SIP?
Equity SIP is suitable for investors who:
- Prefer to invest in individual stocks rather than mutual funds.
- Want to build a portfolio gradually over time.
- Are comfortable with the risks associated with equity investments.
What is the minimum investment amount in an Equity SIP?
There is no minimum investment amount for Equity SIP.
What is meant by "Frequency"?
Frequency is time period for which you want to place your SIP orders. For Ex: Daily, Weekly, Forth-nightly & Monthly. Depending on the Frequency selected by you, we will place SIP orders at the defined intervals after the Start Date for the total period specified by you.
The First order will be placed on the Start Date specified by you and thereafter all SIP orders would be placed as per your defined frequency.
Can I place Equity SIP Request for Sell transactions?
No. You can only place "BUY" orders for SIP under the Equity SIP facility.
Can I change the stock or the investment amount in an Equity SIP?
Yes, you can modify the Quantity/Amount, Frequency and Tenure.
What happens if I miss a payment in my Equity SIP?
If you miss a payment, no shares will be purchased for that period, but the SIP will continue as per the next scheduled date.
Is there a lock-in period for Equity SIP?
No, there is generally no lock-in period for Equity SIPs. You can sell the shares at any time.
