Article by Balaji Rao D G

Investors beware! When you are investing through Systematic Investment Plan (SIP) in equity or debt mutual funds whether offline or online mode avoid choosing “perpetual” investing duration. Let’s see what’s the meaning of this term “perpetual” in systematic investing.

“Perpetual” mode of investing through SIP is to invest monthly in a mutual fund scheme till the year 2099; yes, you read it right, it is till 2099! Which means if you are investing Rs.1000 every month from July 2018 your SIP would end 81 years from today; it further means that if you are 30 year old in 2018 you would be investing till you would be 111 year old, that’s quite a time to live to complete your SIP investing obligation!

Choosing to invest through the “perpetual” mode does not make any sense; it lacks all kinds of logic. Why should anyone invest for 100 years? Investing in mutual funds should be for specific purpose or defined goals of life since human life is full of events.

Retirement, children education, children marriage, vacation and so on are all events which will happen at specific timeframes of life hence it would be ideal to choose specific date and year while investing through SIP route. For example: If you are 30 years and plan to retire at 60 then you should choose 30 years of SIP period; if your daughter or son is 5 year old and 15 years from today she or he would get into post-graduation education then choose 15 years as the SIP period and so on. Goal based investing by choosing specific tenures of SIP is easy to track on an on-going basis while “perpetual” investing is goalless investing.

So, in the future before signing on an application form or investing online in a mutual fund scheme be specific with your goals and investing tenure because it leads to planning based investing which is the right way to invest.

Phundo offers goal based investing solutions in the most uncomplicated manner which is Phundo’s philosophy of advising their investors.


Have more questions?

We are here to address all your queries. Please feel free to reach out to us at any time; your questions are always welcome