NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Mutual Funds
Mr Arjun Rao, a 30-year-old salaried investor, wants to invest Rs 10,000 every month for 20 years through a vehicle that lets him invest fixed amounts at regular intervals and buys more units when the NAV is low. Which facility is most suitable?
A Systematic Investment Plan suits Mr Rao because it invests a fixed amount at regular intervals and automatically buys more units when NAV is lower, giving rupee-cost averaging. Withdrawal plans, equity-to-liquid transfers and dividend payouts do not serve regular accumulation.
- ASystematic Withdrawal Plan
- BSystematic Transfer Plan from an equity fund to a liquid fund
- CDividend payout option
- DSystematic Investment PlanCorrect
Explanation
A Systematic Investment Plan invests a fixed sum at regular intervals, giving rupee-cost averaging, so more units are bought when NAV is low. A Systematic Withdrawal Plan is for taking out money. An STP from equity to liquid moves money out of equity. The dividend payout option is a payout choice, not an investing method.
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