Micro SIPs with as low as Rs 250/month: Should you invest through it?

To broaden the individual investor base such that they take the mutual fund route as an investment option, SEBI chairperson in an event organized by SBI Mutual Fund said that there shall soon be kick-started micro SIPs in India. These micro-SIPs in mutual funds can be started for as less as Rs 250 per month. 

Primarily, this new SIP idea goes in sync with the wider objective of making a range of stocks and bonds available to a wider population at a reasonable price.

Also, the mutual fund route will enable an investor to put his hard-earned money across varied asset classes which shall otherwise be a complex exercise for a beginner. Typically, mutual funds or asset management companies pool funds from different investors and depending on overall market momentum put their money across assets.

So, as mutual funds henceforth be rendered more affordable, more people will be able to reap the benefit of professional fund management as well as diversified portfolios comprising different assets in the overall asset mix.

Should investors go for Micro SIPs?

Nitin Rao, Head- Product and preposition, Epsilon Money Mart believes that while Micro SIP is good initiative to drive further participation from small investors, students, house helps and other low earning group. It is also to  help them experience the advantages of SIP such as rupee cost averaging, financial discipline and so on.

This will also help in broader financial inclusion of this segment of investors, added Rao.

Harshad Chetanwala, Co-Founder MyWealthGrowth held that reducing the SIP amount is good and it can help more investors to invest or even for a segment of investors to try how mutual funds work.

But the key is to educate investors of linking their Mutual Fund investments to their goals and keep contributing in it regularly, added Chetanwals.

Nonetheless, Chetanwala believes educating and linking Mutual Fund Investment to financial goals is more important than just lowering SIP amount.

Rao added that most investors have been away from the market and have not experienced the power of compounding which comes with SIP. Most of these investors do chit funds, daily investment in unorganised credit societies, with this move their investment will start flowing into organised mutual funds. SEBI has also hinted that there will be no KYC requirement if the annual investment is less than 50K, this move will also support higher inclusion of investors from this group, added Rao.