How Do I Start An SIP Investment In A Simple Way?
You must start saving as soon as possible for a secure financial future. However, merely saving is insufficient, as you need to invest your money to create wealth. Mutual funds investment plans have emerged as popular options for many investors looking to grow their money. There are two ways to invest in mutual funds: lumpsum investment or systematic investment plan (SIP).
SIP has been a well-known option with many mutual fund investors. Before you start a SIP, it is useful to understand its meaning, importance, benefits, and implications. This will allow you to plan your SIPs in a better way. Read on to learn more about SIP mutual fund investments.
What is SIP?
A systematic investment plan or SIP is an investment plan in which you invest a fixed amount monthly in a mutual fund. Most Mutual funds plans offer this option for investors. This approach helps create discipline in the investors as they must deposit a fixed amount monthly in the fund. You can choose SIP for as many mutual funds in your portfolio as you like.
SIP is a safer option than a lump sum investment as there is no need to time the market. As you are investing in mutual funds investment plans every month, the risk in investing is also taken care of. Over some time, you reduce the risk factors and can get stable returns on investments.
Benefits of SIP in Mutual Funds Plans
SIPs have become a good option for all investors for mutual funds investment plans. It does not matter if you are a new or an old investor; SIP works well for all. Some of the notable benefits of SIP in mutual funds are as follows: –
- Lower risk: – SIP allows you to reduce the risks in investments. As you invest a fixed sum every month, then over a period, the amount averages out. Hence, you do not need to worry about any ups and downs in the stock market.
- Life goals: – You can plan your crucial life goals with SIP, such as marriage, house, or car. You can start SIPs for each goal, and then, over time, you will be able to create a corpus to meet that goal.
- Easy and simple: – With SIPs, you do not need to worry about depositing the amount every month. Set the option in your mutual funds plans, andthe amount will be added monthly. There is no need for you to monitor it every day.
- Compound income: – In SIP, you invest monthly but do not take out the money. So, the returns you earn on the SIP are re-invested over a period. This helps your returns earn more income leading to the benefits of compounding.
- Flexible: – If you fall short of money any month, you can skip the SIP for that month. Then from the next month, you can resume the SIP as usual. There will not be any effect on your financial future.
Starting SIP in Mutual Funds Investment Plans
You can now start your SIP in mutual funds plans using the internet. Yes, there is no need to go to any office. You only need to provide some documents and personal details to start a SIP. Just follow the simple steps mentioned here and start your SIP mutual fund: –
- Gather all documents: – First, you must collect all the necessary documents. It will be useful if you can scan and save these docs on your computer. Some critical documents are your PAN Card, Aadhar Card, photographs, cancelled cheque or bank statement, etc. If any of these docs are not ready, prepare them as soon as possible.
- Complete eKYC: – Afterthe docs are ready, you must complete the eKYC process. This can be completed through any AMC website or RTA website. As the KYC is completed online, it is known as eKYC. You will need to attend a video call for in-person verification to confirm the details. You will also need to complete the FATCA form and provide the details as required. The documents you need to provide are PAN, Aadhar, mobile number, name, date of birth, and passport-size photo.
- Complete Registration: – You must complete the online registration process on the asset management company’s website (AMC). When you click on the ‘Register Now’ option, they will ask for personal and bank details. Afterward, a new user ID and password will be created.
- Select the mutual fund and investment amount: – Now, you will be asked to select the mutual fund plans from the available list. You will also need to specify the SIP amount you want to invest in. You can use a SIP calculator to help you decide the amount you want to invest.
- Finalise the payment mode: – You need to select the SIP frequency. Most investors opt for a monthly SIP. You will also need to select the date for the debit from your bank account. You can also make your first SIP at this step.
- Submit: – Now you need to submit the form. After this, you will receive an email and SMS from AMC. You will receive reminders from the fund house a few days before the SIP is due every month.
Conclusion
SIP is one of the most well-known options used by mutual fund investors. While there is an option to decide the frequency of SIP, most investors prefer monthly SIPs. This allows the investors to create a sizeable corpus for their future needs. Start your SIPs early, as it will give your money enough time to grow. Before selecting mutual funds investment plans, you must take some time and do in-depth research. A financial expert like Piramal Finance offers you accurate and authentic information on mutual fund investment plans and personal loan requirements if any. Visit us now!