Equity SIP Disciplined investment strategy in stocks-2018

Posted on 16th Jul 2018
by Admin

(4.5/5)

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.

What are the advantages of Equity SIP?

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:

  • Based on the concept of Rupee Cost Averaging – With this, you are buying Stocks / ETFs on a regular interval, which will average your buying/investment cost. That’s the best way of buying stocks for long-term where you don’t need to monitor the market every day, and wait for lowest point for investment.
  • Simple and disciplined approach towards investment – Your investment is done on regular intervals irrespective of the ups and downs of the market. You setup a process or Equity SIP request and Equity SIP Orders will take place automatically on specific dates as per your guidelines.
  • Can be started with a small amount of money invested at regular intervals – You don’t need a big amount to start your investment, you can start as minimum as Rs 1000 per investment cycle. Minimum investment amount will vary from broker to broker, so please refer your broker’s policy for Equity SIP.
  • Flexibility in terms of amount, time period and quantity – Investment is 100% flexible in terms of the amount or quantity one wish to buy, script you want to choose and interval you wish to define.
  • Minimizes volatility risk.
  • No additional charges and no entry/exit load.
  • No lock-in period; offers complete liquidity.
  • Long-term financial goals can be met with SIP.

Limitation of Equity SIP/ Disadvantage of Equity SIP

  • Regular Fund Transfer need to be planned in your brokerage account. Usually Equity SIP is not auto funded via direct bank account.
  • Brokerage Charges – As you need to pay regular brokerage on Equity SIP, if your broker charges minimum brokerage then you needs to pay minimum brokerage for buying 1 or 2 stocks on regular interval. As well as each share in your Equity SIP Order is considered as a transaction.

What are the different types of Equity SIP?

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.

  • Amount based SIP: In this you define fix amount for your investment. It is calculated by dividing SIP amount by Last Trading Price + Buffer (3%) per share. Rounded of quantity will be finalize by Equity SIP engine to take the call before Equity SIP Order placing.
  • Quantity based SIP: In this you define fix quantity of shares/ETFs for your investment. On specified date, Equity SIP engine will check available fund in your account and place a buy request.

All these request are submitted to exchange on availability of funds in your trading account.

How does Equity SIP works?

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.

  • Login to your broker’s online investment portal.
  • Under Equity, you will find Equity SIP or Auto Invest or SEP or RSP option.
  • Under this, your need to define a request by selecting request type as “Fix Amount” or “Fix Quantity”, Select Stocks/ETFs, Select Interval.
  • Once you submit your request, the broker will place your Equity SIP Order on your defined date.

Order will be place as Market Order only, and work same as Cash Market Order.

What is the difference between Equity SIP request and Equity SIP 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.


ICICIDirect

Rated-4/5 Overall

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ICICI Securities SEP

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).

Kotak Securities

Rated-4/5 Overall

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Read the Kotak Securities Review

Kotak Securities Auto Invest

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

Rated-3.5/5 Overall

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Read the Axis Direct Review

Axis Direct Equity SIP - "Systematic Investment Plan"

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.

HDFC Securities

Rated-4/5 Overall

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Read the HDFC Securities Review

HDFC Securities DIYSIP

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

Rated-3.5/5 Overall

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Read the Edelweiss Review

Edelweiss Broking Ltd - "Equity SIP" or "eSIP"

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.

SBICAP Securities

Rated-4/5 Overall

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Read the SBICAP Securities Review

SBI Equity SIP

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.

India Infoline (IIFL)

Rated-4/5 Overall

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Read the India Infoline (IIFL) Review

IIFL Equity SIP

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.

Special Offer:Open IIFL Demat & Trading Account Free - Zero A/c Opening Charge & 1st year AMC waived off (save upto Rs. 1150) Sign up now

Reliance Securities

Rated-3.5/5 Overall

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Read the Reliance Securities Review

Reliance Securities Regular Stock Purchase Plan (RSP)

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.

Does Zerodha or UpStox is providing Equity SIP facility?

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.

List of full-service stock brokers missing Equity SIP Service.

Few big brokerage houses like Sharekhan, Geojit, Angel Broking, Motilal Oswal, Religare and SMC Global are missing Equity SIP product from their portfolio.

Final Note:

If you are somebody who wants to play safe in 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 then 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 benefit of it.

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