How to Start Investing in a Mutual Funds SIP?

Savings is perhaps the basic goal of every earning individual. You will find it tough to locate an individual would want to put in hours of effort to earn just as much that he is able to pay off all his expenses and be left with nothing to keep aside for his and his loved one’s future.

While savings are important, what is even more rewarding is to see your savings grow over time. If that happens, you know for sure that you are doing good for yourself and your family. With mutual funds, growth in your savings becomes a tad bit easy.

Among the different types of mutual funds, Systematic Investment Plans or the SIPs as they are commonly known as are increasingly becoming popular investment vehicles for the working class. As the name suggests, the SIPs are all about investing in a specific plan systematically over a period of time to earn good returns at the end of such period.

If you go by what the mutual fund experts believe in, the SIPs are the best investment vehicles for periodic investments. Though SIPs are quite common investment vehicles, the fact remains that there is not complete clarity on how an SIP really works or what are the steps to start investing in any SIP.

What is an SIP and How Does it Work?

Simply put, an SIP is an investment tool. It works best for people who like to invest regularly as this investment tools systematically regularises your investments in mutual funds. In case of SIPs, regularity is the key element and not the amount you want to invest.

The SIP can be started with as low as INR 500 every month and can go up to any amount that you can set aside from your earnings consistently every month for a certain period. The frequency of investment in the SIP is also up for your choice – you can start a daily, weekly, monthly or quarterly SIP but being regular with your frequency and investment is essential.

SIP (Systematic Investment Plan): Daily, Weeky, Monthly, Quarterly)

SIPs are the best-recommended options for those interested in mutual funds as it helps them maximise their returns while averaging out their cost of purchase. The best that an SIP does to any working class individual is that it imparts discipline in financial savings and compels the investor to invest a certain amount regularly no matter what the condition in the market.

Also read: How to open a fix deposit with HDFC Bank

How to Start Investing in a SIP?

When you decide to invest in an SIP, you choose to take up a financial commitment. To do so, you need to first evaluate your income and total expenses to decide how much amount of money you can put aside for an SIP every month or for whatever frequency of investment you are considering.

A monthly SIP is often believed to be the most feasible option for working class individuals. Once you have evaluated your financial position, the next thing to do is to find the right fund and start investing. While you can always rely on your research to find the right mutual fund, if you are not too sure, several professional investment consultants can help you choose the right mutual fund based on your financial situations and financial goals.

Initiating the Process to Invest in SIP

Once you have decided on the mutual fund, you can initiate the process to start investing in the SIP. It typically involves three basic steps. Below are the details on how easily you can complete these three steps and start your SIP fund.

Step 1: Arrange your Identity Documents

Typically, you will only require basic identification to start investing in an SIP. These include your PAN Card, an address proof which could be your driving license, bank statement or Aadhaar card, a passport size photograph and your chequebook.

You will need the chequebook for verification of your bank information. As such, there is no compulsion to have an Aadhaar card but having it will make the whole process lot simpler.

Identity and Address Proof documents required for SIP Mutual Funds: Pan Card, Aadhar Card, Driving License

Since you can complete this process online, an active internet connection is the need of the hour. With these basics, you can complete the registration process and get started with your SIP in a jiffy.

Step 2: KYC Compliance

It is essential you fill in the KYC compliance form to get eligible for investment in the SIPs. The KYC requires you to provide basic details such as your official name, date of birth as per your identification documents, mobile number, and address. You will need to complete the KYC compliance process just once even though you may be planning to invest in several mutual fund or SIP schemes.

If you prefer to go online, you can use the eKYC facility that is easy and convenient to use. Most reputed mutual fund companies allow you to complete the KYC formalities online as long as you furnish soft or scanned copies of the required documents.

Merely fill in the necessary details in the online form and upload soft copies of your official documents such as your PAN card and address proof to support the details mentioned in the form. Once you submit the online form, the KYC process will be initiated, and a representative from the mutual fund company will conduct a video call to complete the KYC process.

Just remember, using your Aadhaar card to fill digital KYC form will make the process much easier and quicker as details in the card can be linked to pre-populate the form. If you adopt this measure, there will be no need to have a conference call with the mutual fund representative.

Step 3: Going the Online Way (Easiest and Popular)

Once you have completed your KYC compliance check and have decided the mutual fund you want to invest in, you can check the web link of the mutual fund company and choose the shortlisted SIP.

There are different funds based on the level of risk you are willing to undertake. In case you are a first-time investor, it is recommended you start with low-risk funds that have average returns.

The Bottom Line

You can start the process of investing in the SIP by registering yourself as a new investor and fill in some basic personal details. You can then choose your username and provide a password for accessing your SIP online. As SIP is a regular investment plan, you can submit your bank details and set up an auto debit with your bank for a monthly (or the frequency you have chosen) payment into your SIP. You can also select the date you will invest in the SIP every month based on your convenience.