Is your SIP really an SIP? Sounds like an odd question to ask, one where even the meaning of the question is not clear. However, to a small fraction of my readers, this will make perfect sense, all because of a rather nasty surprise they have had recently. They thought they were investing through a systematic investment plan (SIP). All the outward appearances of investing through an SIP were there — money was going out of their bank accounts every month, fund units were getting credited, the apps they were investing through were all saying SIP, and then it all stopped, much to their shock.
Here’s the story, and the reasons why I think you should ask some careful questions from the distributor/service which you are using to invest in funds. In the last couple of years, we have had a number of new online services that have started selling mutual funds. This includes app-based services run by startups as well the ‘MF Utility’ run by the mutual fund industry itself. These services generally claim to offer a far higher convenience than traditional distributors while being free to the investor. Not only are they free in the sense of not charging anything, they are also free because they deal only in direct plans of mutual funds, which do not yield them any commission.