AMC SIP: A Detailed Overview

A SIP or a systematic investment plan is an investment strategy through which individual investors can invest a fixed amount of money regularly into a mutual fund scheme managed by an asset management company.

What is AMC SIP, then?

In this blog, we will look at what AMC SIPs are and their features and benefits.

What is the meaning of AMC SIP?

AMC SIP stands for “asset management company systematic investment plan.” It is a systematic investment plan that is set up with an asset management company (AMC) of a mutual fund. Hence, the investor directly deals with the AMC rather than an intermediary.

An Asset Management Company is a firm that pools funds from individual investors. It invests those funds in securities and manages the investment portfolio on behalf of the investors. SBI Mutual Fund, HDFC Mutual Fund, and ICICI Prudential Mutual Fund are some prominent AMCs in India.

SIP is an investment strategy that allows individuals to invest a fixed amount of money regularly into a mutual fund scheme managed by the AMC.

An investor in an AMC SIP deals directly with the asset management company. No intermediary, like a broker is involved. So, an AMC SIP is a good investment tool who prefer managing their own accounts and want more control over their investments.

Having understood what AMC SIP is, the next question that arises is: what is AMC SIP on the Coin by Zerodha?

Coin is a platform that lets you purchase mutual funds online directly from asset management companies without any commission passback. Coin allows you to access all your investments, including mutual funds, currencies, stocks, bonds, etc, all in one place.

In the case of AMC SIP in Coin, the Coin is used as the interface to set up the AMC SIP directly with the asset management company.

What are the features of AMC SIP?

Systematic Investment Plans that are set up directly with the Asset Management Company (AMC) of a mutual fund have the following features:

Real-time Updates: AMC SIP investors can directly access the net asset value of their investments on a real-time basis. This allows the investors to track the performance of their investments on a daily basis.
Rupee Cost Averaging: AMC SIPs help you take advantage of rupee cost averaging. As a fixed amount is invested regularly, more units are bought when the price is low, and fewer units are bought when the price is high. This reduces the impact of market lows and highs.
Flexibility: AMC SIPs are flexible both in terms of the amount invested and frequency of investment. The amount to be invested can be modified with the change in their income levels. Investments can be made monthly, quarterly or semi-annually.
Professional Fund Management: Professional fund managers manage these SIPs. These professionals regularly gauge market conditions and other factors to make informed decisions.
Develop Investment Discipline: With their flexibility both in terms of the amount invested and the duration of investment, AMC SIPs encourage long-term investment. Over a period of time, these savings accumulate and harness the power of compounding, leading to the creation of wealth.
Tax Benefits: Investment in equity and balanced mutual funds is eligible for deduction under Section 80 C of the Income Tax Act Investments.

What are the Benefits of AMC SIP?

AMC SIPs are essentially attractive for the following reasons:

1. Accessible

Investors can start investing with a small amount in an AMC SIP. The investment can be increased over time. Hence, AMC SIPs make it possible for small investors to participate in financial markets.

2. Diversification

AMCs have different mutual fund schemes catering to different risk profiles of investors. Depending on their risk preference, investors can invest in equity, debt, or hybrid funds. This can lead to more stable returns.

3. Creation of Wealth

By investing in Sips over the long term, investors can leverage the power of compounding. Over time, even small investments can grow into a substantial corpus.

4. Convenience

AMC taruvar SIPs are easy to set up and can be set up online or through mobile apps of AMC’s. The process of investing through an AMC SIP is also very simple and can be easily set up with auto-debit instructions.

5. Habit of saving

AMC SIPs encourage the habit of savings by encouraging investors to allocate a certain percentage of their income towards investments. This cultivates a habit of saving without the need to remember to invest actively.

To conclude, we now understand what AMC SIP is. It is an SIP that is set up with the asset management company of a mutual fund. So, the investor directly deals with the AMC rather than a broker or any other intermediary.

The combination of disciplined saving, the power of compounding, flexibility, and professional management make AMC SIPs a powerful investment tool. Whether you are saving for your child’s education or your retirement, AMC SIPs are a powerful investment tool that can help you attain your goals.

FAQs

1. What is the difference between SIPs and AMC SIPs?

SIP refers to a systematic investment plan. It is an investment offered by mutual funds to invest a fixed amount in a mutual fund scheme at regular intervals.

AMC SIPs are SIPs that asset management companies specifically manage. Here the investor directly deals with the AMC rather than an intermediary. So, while all AMC SIPs are SIPs, not all SIPs are AMC SIPs.

2. How to start AMC SIP?

To start an AMC SIP, follow the steps given below:

Start by researching various AMCs and selecting one.
Having chosen the AMC, choose a mutual fund scheme that aligns with your investment goals, risk tolerance, and investment horizon.
Complete KYC formalities.
Register for the SIP and start investing.

3. What Happens if I miss my AMC SIP?

Nothing will happen, don’t worry. You will not be penalized if you miss your AMC SIP. It does not affect your credit score, either. Some banks may charge a fee for Electronic Clearing Service rejection.

AMC: A Detailed Overview