Investment in mutual funds through the Systematic Investment Plan has become increasingly popular over the last few years. This is because they allow you to invest small amounts regularly for as long as you need so that you can spread out your risk and build long term wealth. But, before you decide to invest in a sip mutual fund, it is important to know what an SIP is and the process to get started on your SIP investment journey. Doing so will help you get into a healthy habit of investing your money, minimizing your risks, and achieving your financial goals over time.
SIP is an investment tool that allows you to invest a specific amount periodically towards your preferred mutual fund scheme. The frequency of the investment and the date on which to invest small amounts can be decided by the investor rather than making a single full investment.
SIP investment plans allow you to stagger your investments over time and have the feature of an auto-debit from your bank account each month. Additionally, you can pause and restart investments as per your comfort. SIPs help you harness the power of compounding as an investor. Over time, these investments can help you meet your long term financial goals in a steady manner. Typically, disciplined investors set aside a part of their monthly salary to be automatically invested through SIPs.
1. Identify your investment objective
The first step is to understand and define your financial goals before investing in mutual funds. It is imperative to determine goals and timeline based on your monthly income and expenses like loan repayment, education, marriage, vacation, etc. With your investment objectives and risk tolerance determined, you can decide what mix of investments is best for you.
2. Complete the KYC details
To be able to invest in mutual funds via SIP, one must be KYC compliant. You can complete this step easily by filling up a KYC form with details such as name, date of birth, address, and mobile number, and submit it with a soft copy of your pan card and address proof. If you prefer, you may also complete KYC online through the online trading app or mobile trading app of the mutual fund house or through CAMS KRA.
3. Choose the right mutual fund
With a plethora of mutual fund options available, you must select the most suitable fund based on your financial goals and risk appetite. To buy SIPs online or pick the right mutual fund scheme, it is advisable to seek professional help from an experienced financial planner or a mutual fund company like Motilal Oswal.
4. Select the SIP details
The next step would be to finalize some crucial details about your SIP like the frequency of your investment – whether you want to put in money weekly, monthly, or quarterly, a specific date or multiple dates to pay as per your convenience, duration, and the amount that can be altered when required.
5. Start the SIP online
Once the above details are finalized, you can visit the website of the fund house and register by filling in the required basic details. You are now all set to start your SIP journey.
Now that we've clarified all your SIP-related queries, you can get started on your SIP investment journey today!
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