A systematic Investment Plan, popularly known as SIP is the most preferred way of investing in mutual funds to achieve medium-term to long-term goals. SIP allows you to invest a fixed amount into a mutual fund at a regular frequency (monthly/quarterly/half-yearly/yearly) chosen by you for a specific period. The amount of investment gets directly deducted from your bank account linked to the fund on a chosen date. Investing in SIP is a great option for even the first time and young investors as the rupee cost averaging of SIP helps in mitigating the risk and reaps the benefit from market volatility. In this article, letís know how to invest in SIP with ease.
Investing in SIP is super easy and extremely convenient. You can start SIP investments both offline and online platforms directly through mutual fund houses, intermediary platforms, distributors, and brokers. SIP investments are extremely easy to start online on mutual fund investment apps. Before you begin to invest in SIP, here is a simple step-by-step guide for how to invest in SIP in India
Know your goals and assess your risk
Before you start your investment, it is important to know your goals, the target amount that you need, and the time horizon to achieve them. Once you know your goals, you need to assess your risk to understand your risk tolerance level. Your investment plan should be goal specific and based on your risk-return profile.
Choose the right mutual fund for you
Once you know what are you investing for and your return expectation from the investment, you can choose a suitable mutual fund for you. For example, if you are looking to invest in a mutual fund SIP to build a significant corpus for your childrenís higher education, you can explore many fund varieties in equity mutual funds. Letís say you are also looking for consistency and stability, then you may consider large-cap equity funds. Based on your goal, risk, and investing style you can choose the right mutual fund for you.
Decide the investment duration
Once you know which fund to invest in, choose the duration of SIP. Letís say you are investing for a goal that is 5 years away, you can keep the duration of SIP as 5 years.
Select the frequency and the date
SIP offers you the flexibility to choose the frequency of investment and the convenient date for you. Letís say you choose a monthly frequency for SIP, you can select any of these dates Ė 1, 5,10, 15,20,28 which is given by most of the investors. Sometimes these dates may vary depending on the fund that you choose.
Decide the mode of investment: offline or online
Decide whether you want to invest offline or through an online platform. The auto-debit of subsequent purchases will be done in both cases. However, online is the most convenient and easiest method to invest in SIP.
Keep a long-term perspective
While investing in SIPs, it is important to stay invested for long to reap the maximum benefits especially when you are investing in equity-oriented funds.
Now that you know how to invest in SIP, are you wondering how to start SIP on the online platform? Letís take you through the process. Here are some of the simple steps to follow to know how to start SIP investments:
Keep the relevant documents ready
Before you start investing in SIP, itís important to keep certain documents handy. Your PAN card, bank account details along with cheque leaf, address proof, Aadhaar, and a passport size photograph are the most important documents needed to start.
Ensure to be KYC compliant
KYC verification is a one-time requirement to be completed to start investing in SIP. Mutual fund KYC can also be done online by uploading all the KYC (Know Your Customer) documents such as PAN card, Address proof, selfie or photograph, and signature and you can complete the process with Aadhaar based e-sign.
Start investing in SIP online
Once you are a KYC complaint, it is easy to invest in SIP online. Here is a simple guide to know how to start SIP online.
Investing in SIP is that easy! Start planning for your future goals today!