LIC Mutual Fund to Introduce Rs 100 Daily SIPs, Opening Doors for Smaller Investors
A new investor, who wants to invest in the mutual fund market at a steady pace, has an exciting option. Traditionally, a systematic investment plan-SIP-perspective would need a minimum of Rs 500 a month to get started with. However, the new development places even lesser amounts in investors’ consideration point view, now the total amount will be as low as Rs 100, in case of daily SIPs, much lower than the existing threshold of Rs 300. The company will introduce this facility by the first week of October, according to its statement.
The good news comes at an apt time when the news of recent developments which includes a more inclusive approach of broad retail participation pushed by SEBI has been heralded. The SEBI chairperson recently stated that the regulator was working with mutual fund houses to introduce Rs 250 per month micro-SIPs, aimed at attracting more investors. The new initiative of a Rs 100 daily SIP, therefore, fits in with SEBI’s vision of delivering financial inclusion, particularly in the smaller cities and towns.
The shareholder base of LIC Mutual Fund is increasing and its footprint is expanding in cities like Dehradun, Jamshedpur, Jodhpur, and Durgapur. If the new SIP model will be implemented then the minimum daily SIP amount would be decreased to Rs 100, the monthly SIP to Rs 250 from Rs 1,000 and the quarterly SIP to Rs 750 from Rs 3,000.
Hence, experts from the financial sector appear optimistic and have said that this would attract more people into the equity market. A person can invest from as low as Rs 250 a month. Thus, it forms a scope for persons with lower incomes, who are recent entrants into the job market, students getting stipend, housewives, or even retirees to try their luck with equity mutual funds without huge financial outlay.
Apart from this, many retail investors still believe that mutual funds need huge investments. Relaxation in SIP thresholds can alter this perception and encourage more participation. There is a hope that Micro-SIPs could help increase the market size by creating saving and investment habits amongst the rural and low-income population. This can lead to a tremendous amount of improvement in financial inclusion and bring more people into the wealth creation process in mutual funds.
