Investing in a Systematic Investment Plan is among the most secure and effective ways of building wealth in the long-run. Investing in SIP refers to, whereby an individual is able to invest a given amount of money at certain intervals such as monthly in mutual funds.
This method not only assists in saving gradually to gather capital but also enables the given investor to take full advantage of the rupee cost averaging factor. Now it is time to take a look at how you can start investing in SIP online in India, more specifically, the steps to do that.
What is SIP?
SIP stands for Systematic Investment Plan and this is a method of investing a fixed amount in mutual funds at a fixed regular interval. In the long run it enables one to acquire wealth with a given mutual fund by being able to purchase units at varying prices due to movement in the market.
Checkout: What is Systematic Investment Plan in Mutual Funds and How SIP Works?
7 Steps to Start Investing in SIP Online
Step 1: Set Your Investment Goals
In other words, as you prepare to start SIP investment, you must first recognize your preferred financial objectives. Are you building for retirement, a down payment on a house or for your child’s education? Understanding your goals is therefore very important when making a decision as to which mutual fund scheme to go for. And, how long you are willing to invest in SIP.
Step 2: Gather the Necessary Documents
To start investing in SIP, you will need a few essential documents:
- Proof of Identity (POI)
- Proof of Address (POA)
- PAN Card
- Bank Account Details
Step 3: Complete Your KYC (Know Your Customer)
The KYC process is required to verify your identity and address to start SIP investment. You can complete it online through the mutual fund company's website or through a third-party KYC registration agency. Here's how:
- Visit the KYC Registration Page: Visit the official website of the concerned AMC or the KYC registration agency of your choice.
- Fill in Your Details: Give the basic details like name, address, PAN number and other contact information details.
- Upload Documents: Upload scanned copies of your POI, POA, and include a passport size photo.
- Verification: Finish the in-person verification (IPV) either online via a video conference or at a designated office.
Step 4: Choose a Mutual Fund Scheme
Once you have filled your KYC form it is now time for you to choose the mutual fund scheme of your desire. Here are a few tips:
Risk Profile: Always select a scheme that you have the ability to handle the risks it comes along with. The equity funds are slightly risky than other funds but yield a higher rate of return; the debt funds as we know are safer than the equity funds but have a lower rate of return.
Investment Horizon: Look for funds that best suit the investment period you have in mind. Of course, long-term objectives will be more suitable for equity funds, while short-term goals may yield better results with the help of debt or hybrid funds.
Fund Performance: One should consider its performance, historical performance, and the expense ratio that the fund charges.
Checkout: Top 10 Best Mutual Funds for SIP to Invest in 2024
Step 5: Register for SIP Online
Finally, now you have to register for your SIP. Here’s how you can invest in SIP online:
- Visit the Mutual Fund Company’s Website: To venture into a particular AMC, go to the website of the desired company.
- Create an Account: It requires creating a user profile to gain access by completing personal information input and a user identification with password creation.
- Select the SIP Option: Go for a tab that is segmented investment then select the sip option.
- Choose the Scheme: Choose the mutual fund scheme you chose in the earlier step among the schemes of the mutual fund you prefer.
- Set SIP Details: SIP is a system of investing a fixed amount at regular intervals, you need to enter the amount you wish to invest in SIP, the frequency of the investment i.e whether monthly or quarterly and the SIP start date.
- Bank Details: Give your bank account number and other details for the auto-debit of this SIP amount.
Step 6: Set Up Auto Debit
If you wish to keep your SIP investments worry-free, it is best to opt for auto debit from your bank account. This ensures that on a specific date of every month; SIP amount is automatically debited from the account. You can set this up by:
E-Mandate: Visit the e-mandate form on the bank’s online platform and provide an authorization for auto-debiting of the SIP amount.
Physical Mandate: You can get the mandate form either downloaded or printed from the internet and sign it before presenting the document to your bank or AMC.
Step 7: Monitor and Adjust Your SIP
Once you have your SIP in place, another important practice is to check your investments periodically. Look at the results of the mutual fund scheme that you have invested in to make sure that it is in line with your business objectives.
It is advantageous as one can periodically adjust the SIP amount according to the level of income with an aim of getting high returns.
Checkout: Top 5 Reasons Why You Should Start Investing Early
Conclusion
Investing in a systematic investment plan online is quite easy as well as beneficial for investing in mutual funds to achieve long-range investments. By following these simple steps mentioned above and paying attention to how to manage and start SIP investment you will be on the right track to achieving your financial goals.
However, it is important to understand that, apart from diversification and risk management, what works for almost all investing styles is discipline, and starting as early as possible to have the longest period of compounding.
How to Start Investing in SIP Online