Last week I wrote about some questions on SIPs (Systematic Investment Plans), and reader Tapan Ghosh wrote in to me, and told me about perpetual SIPs.
Perpetual SIPs allow you to set up a SIP without an end date. There are a few fund houses that allow you to do this like Reliance, IDFC, and UTI.
It seems that you don’t need to specify an end date, and in order to stop payment, you have to tell the AMC (Asset Management Company) to stop the transactions.
If you want to continue then all you need to do is send more checks or further instruction for a bank auto – debit. I didn’t find much info about it online, so its best to talk to your agent about these perpetual SIPs.
Personally, I think you are better off taking a SIP out for a certain time period, and then evaluating your decision and making changes accordingly, but I am sure this way has got appeal for some of you.
If anyone has practical experience with any perpetual SIPs, then please leave a comment and share with other readers.
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which broker allows you to do Perpetual SIP?
Manshu, Do you trade options in India? is it worth ?
Any broker recommendation
I don’t have any broker recommendations because I have just used ICICI Direct myself, and found them quite satisfactory, so I don’t really have experience with others. Trading Options is entirely up to you, I do dab a bit with Options, but it is a personal choice that you have to make.
I see one practical problem. Auto debit instructions to bank take time to process. When SIP is registered, fund house sends that instruction to bank and takes care that it starts SIP after (atelast)45 days of SIP start request.
In case of perptual SIPs, it is your responsibility to renew auto-debit instructions after initial period lapses as bank doesn’t allow infinite auto-debit instructions.
Now the problem is you have to take care of synchronization of SIP dates and auto debit permissions. In case of even a day lapse, you may face ECS bounce charges.
Good point…from what you describe it looks like there is a possibility of an ECS bounce charge. I’ll write to Tapan Ghosh and see what he thinks.
Thanks!