How To Invest Through SIP?
Updated On Aug 19, 2021
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SIP or Systematic Investment Plan is an investment vehicle that allows individuals to periodically invest a small but considerate amount towards their preferred mutual fund scheme. Details such as the frequency of the investment, the date on which it takes place, and the investment amount are pre-determined by the investors. Investors prefer investing in SIP as it helps mitigate risks and promotes disciplined financial planning among them while encouraging regular investing habits. By investing in SIP, individuals can efficiently operate in both rising and falling markets and claim the benefits of both.
The goal of any SIP investment is to assure that your portfolio gets the desired risk, i.e. according to your tolerance, and also initiate diversification across various asset classes. Diversification is essential to earn maximum returns on your investments.
How To Invest In Systematic Investment Plan (SIP)?
If you are wondering how to start investing in SIP, follow these simple steps:
Know The Investment Objective And your Risk Appetite
You should first understand your risk tolerance before investing in mutual funds. After you have assessed your risk appetite, it is vital to understand why you want to invest and define your financial goals. It is essential to determine the objective of your investment to fetch an ideal portfolio mix of debt and equity.
Choose The Appropriate Mutual Fund
There are many types of mutual fund schemes available, the selection of your mutual fund should be aligned with your financial goals, risk appetite, and investment horizon. While picking the fund, you should also take its past performance into account. Once you have zeroed in on the mutual fund company you wish to invest in, follow these steps:
a) Online Process
- In case of a new investor create a new account or log in with existing account credentials.
- Duly fill the KYC (know your customer) details
- Make payment online
b) Offline/physical Process (In case you want to submit a paper form)
Duly fill the application form and KYC (know your customer) form. If you plan to opt for the offline mode, fill up a cancelled cheque along with ADF(auto-debit form). However, if you opt for the online method, fill up the ADF(auto-debit form) and submit it at the nearest branch to be provided to the bank or opt for bill pay / e-mandate /e-nach payment mode. Provide requisite identity proofs like address proof, utility bills, etc.
Select The Date Of Your SIP Investment
You can choose a date at your convenience. You can also opt for multiple dates for several SIP investments in a month.
Also Read - Are Mutual Funds A Good Choice Of Investment?
How Long To Invest In SIP
Investing in SIP is one of the most appropriate ways to fulfil your financial objectives. You can also consider using a SIP calculator to estimate the returns on your mutual fund investments.
How Much to Invest in Systematic Investment Plan (SIP)?
To determine the amount you need to invest in SIP, you need to figure your financial goals and the corpus required to achieve them. Also, consider other factors like your affordability, risk appetite, how long can you stay invested, etc. What might be an ideal SIP investment amount for your friend, might not be the same for you.
Once you are all set to take the SIP route for your mutual fund investments, the next part – how to start SIP – is not challenging at all. Remember, the earlier you begin with your SIP investments, the higher the opportunity of potential wealth creation. So start investing in SIP today.
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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.