Posted on 16th Jul 2018
Equity Systematic Investment Plan (Equity SIP) also known as Systematic Equity Plan (SEP) or Regular Stock Purchase (RSP) facilitates investors to build a portfolio over a longer time horizon with small investments at regular intervals. This, in turn, reduces the risk of market volatility. Investors can choose between quantity-based or amount based SIPs in Equity, Equity ETFs and Gold ETFs.
Equity SIPs allows investors to systematically purchase certain shares / ETFs, through periodic payment either daily, weekly fortnightly or monthly. This is especially beneficial for salaried investors who prefer to build a long-term portfolio in stocks / ETFs without investing lump sum.
Equity SIP is a viable investment option for small investors. You can invest in small amounts periodically without worrying about the volatility factor of the market. This approach is best for long-term financial goals achievement. Equity SIP provides the following benefits:
You can invest in Equity SIP in two ways – amount based or quantity based. All brokers allow you to create multiple SIP request, each request should be either amount based or quantity based, you can mix and match different types in one request.
All these request are submitted to exchange on availability of funds in your trading account.
Equity SIP is a process which you need to setup one time. Let’s discuss the steps which you need to take care to setup your process.
Order will be place as Market Order only, and work same as Cash Market Order.
Equity SIP request is an authorization given by you to broker for placing buy orders as per your instructions mentioned in the request.
The orders placed by broker as per your authorization through the SIP request is called Equity SIP orders.
The Equity SIP facility with ICICI Direct is called Systematic Equity Plan (SEP). In SEP, you can invest in selected equity and/or ETFs at regular interval through automatic set up process. You need to set process once and your recurring investment will be taken care by ICICI Direct. The SEP can be done either in Fix Amount or Fix Quantity at the defined interval (Daily, Weekly, Fortnightly or Monthly).
Auto Invest is the similar feature of Kotak as ICICIDirect / ICICISecurities Systematic Equity Plan (SEP). Generally, when we talk about a systematic investment plan (SIP) we always think about Mutual fund SIP. But big banks allow you to invest systematically in equity via SEP or Auto Invest. Kotak Security Auto Invest is a process where you can choose from a selected list of stocks and start Daily, Weekly, Fortnightly or Monthly buy option. For SEP, you have two options - Fix Quantity or Fix Amount. In Fix quantity option you can specify the fixed number of shares by a script on given time interval. In Fix amount option, you can specify the fixed amount on given time interval. In both the cases, Equity will be added to your account from market order @10:30 AM.
Axis Direct Equity SIP is a facility with which investor can invest systematically and in a disciplined manner for collection of one or more stocks or ETFs. One SIP should have a common trigger date and frequency. It allows you to invest in stocks or ETFs by making periodic investments (Daily, Weekly, Fortnightly, and Monthly). Minimum Investment amount is Rs 750. Axis Direct will keep 3% of LTP as a buffer to do the calculation for buying a script under Equity SIP.
Do It Yourself Systematic Investment Plan (DIY SIP) is a self-investment plan in Equity. This is similar to ICICIDirect/ICICISecurities Systematic Equity Plan (SEP). In this product, HDFC Security is allowing Investors to buy Equity, Gold ETFs or Index ETFs in a disciplined manner. When it comes to buying scripts on a regular interval, you can opt Fix amount or Fix Quantity option. Interval can be Daily, Weekly, Fortnightly or Monthly. Company charge 249+ Tax as a onetime fee to initiate DIY SIP service. For DIVSIP you have selected list of scripts and ETFs. The investor needs to choose from that stock list. One can make multiple baskets with different investment dates.
Edelweiss Broking Ltd is offering Equity SIP “eSIP” as well as Equity SWP “eSWP” facility also. You can place Equity SIP/SWP request on any scripts. Edelweiss research team will give you a list of 5 stocks as a recommendation for eSIP.
To invest in Equity as SIP, SBICAP Securities Limited/ SBISMART offer a special service called AutoInvest. Investment in Equity/ETFs can be done via quantity based SIP or amount based SIP. With Equity SIP, you can invest regularly without worry about the right time to invest.
IIFL has Equity SIP facility, where clients can invest in Equity or ETFs on a regular interval. Rs 10 per Installment will be charged for placing Equity SIP orders other than normal brokerage and applicable charges.
Reliance Securities RSP will allow you to invest in Equity or ETFs as a disciplined investment strategy. This is a good option for an investor who wishes to do Systematic Investment in Equity and not want to use Mutual Fund SIP.
None of the Discount Brokers are providing Equity SIP facility. If Zerodha and Upstox start Equity SIP facility then it will be a big win for investors as both the discount brokers allows FREE Equity Delivery Trading and buying Equity SIP is part of the same bucket. 5paisa, the discount broking arm of IIFL doesn't provide this facility however its parent company is providing AutoInvest. SAMCO, Fyers, Prostocks, Finvasia, Wisdom Capital also doesn't provide Equity SIP feature.
Few big brokerage houses like Sharekhan, Geojit, Angel Broking, Motilal Oswal, Religare and SMC Global are missing Equity SIP product from their portfolio.
If you are somebody who wants to play safely in the stock market and wants to be a long-term investor rather than a trader, then Equity SIP will be a good option for you. We recommend our user community of small investors who can’t invest lump-sum investment to start Equity SIP. It is a disciplined investment strategy for long-term goals. Other than high brokerage charges we don’t see any disadvantage of Equity SIP. We assume key discount brokers will also start this service soon, so small investors get the benefit of it.