Are you a new investor who is contemplating investing into mutual funds but want to go a little slow? Well, you can go via systematic investment plan (SIPs) where you are supposed to invest only ₹500 a month. But what if you want to invest even smaller than this, say ₹250 a month, or perhaps ₹100 a day.
If that is the case then there is good news for you. LIC Mutual Fund has plan afoot to launch daily systematic investment plans (SIPs) of ₹100 while the current limit stands at ₹300 for the fund house. The launch is expected to happen by the October first week, said Ravi Kumar Jha, managing director and CEO of LIC Mutual Fund.
This is quite relevant in the wake of latest announcement made by Securities and Exchange Board of India's (Sebi's) chairperson Madhabi Puri Buch who spoke about micro-SIPs to facilitate wider participation of retail investors.
Sebi chairperson had said early this month that the regulator is working with mutual fund houses to develop a new ₹250 per month micro-SIPs.
The phenomenon of micro-SIPs will be particularly relevant for the fund houses which are looking at setting shops in the small cities and towns such as LIC MF which has plans afoot to expand their reach in Dehradun, Jamshedpur, Jodhpur and Durgapur, among others.
| Frequency | Current SIP (Rs) | Micro SIP (Rs) |
| Daily | 300 | 100 |
| Monthly | 1,000 | 250 |
| Quarterly | 3,000 | 750 |
If the new changes come into effect, the daily SIP will be available for ₹100 instead of ₹300, monthly SIP will fall to ₹250 from ₹1,000, and the quarterly SIP will require an investment of ₹750 only instead of ₹3,000 currently.
Financial advisors believe that this is a good move and will ensure financial inclusion of more number of retail investors.
“By just sparing ₹250 a month, one can easily be a part of the equity asset class and be a part of a highly regulated and managed wealth creation product. It helps those who earn less or just started earning, those who get a small stipend or pocket money as well as housewives and retirees who never invested in equity MFs and can with the smaller SIPs and see how this investment works,” says Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services.
“Most of the time, common investors think that investing in popular wealth-creation products such as mutual funds require a lot of money and thus keeps himself away from this amazing yet simple wealth-creation vehicle that works on the principle of compounding,” she adds.
“Micro-SIPs are poised to expand the target market for the mutual fund industry, and would encourage investors from rural and low-income segments to start the SIPs. This is likely to foster investing habits among the masses, significantly contributing to financial inclusion,” says Ravi Jain, co-founder and MD of Blostem, a fixed deposit (FD) aggregator platform.
