October 21, 2020

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How to invest in SIPs in India in 5 easy steps

3 min read
Systematic Investment Plan or a SIP is a periodic investment plan that lets you invest...

Systematic Investment Plan or a SIP is a periodic investment plan that lets you invest in mutual funds. There are three types of SIPs based on investment periods: weekly, monthly and quarterly. Once you set up a monthly SIP for a mutual fund with a certain amount, that amount will be auto-debited monthly for the tenure of the chosen fund. An investor can have multiple SIPs at the same time. SIPs help save money for investors since they come with a “save first-spend later” pattern. Several advantages of investing in the best SIP mutual funds include:

  • Flexibility in investing, you can start investing from INR 500 monthly. Investment can be done through a one-click process online
  • It helps save money better through periodic investing
  • Investors get relatively high returns through the best mutual funds for SIP, compared to other savings and investment options. Returns will be compounding yearly throughout the tenure
  • Rupee cost will be averaged throughout tenure, you will buy more units when the unit price is low and fewer units when the price is low
  • No need to invest in lump sums

Guide to investing in SIP. Source: scripbox.com

How to invest in SIPs in India in 5 easy steps

SIPs work best for long-term investments to save money and money wealth for investors. Investors can also start multiple SIP for various periods. Here is the step by step guide to investing in mutual funds through SIPs. 

1) Structure your SIP:

You can structure your SIP by deciding on these things.

  • How much do you want to invest
  • What is the frequency of your investments (weekly, monthly or quarterly)
  • What is the duration of your investment
  • Date of debit for SIP

Once you decide on all of these things according to your financial goals you can move on to find the best mutual funds for your SIP

2) Choose from the best mutual funds for SIP:

Based on your risk profile, you can choose from the mutual funds available in the Indian market. Go for the fund with consistent performance over the years than the ones that are currently on the top of the charts. You can consult a financial advisor if you are not certain above the steps 1 and 2, he/she should be able to help you decide your SIP structure and the best mutual funds for SIP

3) Keep Documentation ready:

The documents required for starting a SIP account with most fund houses include:

  • PAN card (if you want to invest more than 50,000 INR yearly)
  • Address proof
  • Passport size photograph
  • Cheque book for bank account details

With these documents in hand, you can apply for a SIP account online by visiting the website of the fund house. You can also apply offline by visiting the office of the fund house or through an agent

4) Get KYC done & Start Investing:

A KYC (Know Your Customer) form needs to be filled by you. Verification can be done online or offline (in person). KYC will require you to fill the details of your Aadhaar Card and a verified phone number for OTP purposes. Once your KYC is verified and compliant with fund house requirements, your SIP account will be set up. Through this account, you can manage your SIP investments

5) Keep investing for the chosen period:

Once you start investing in one of the best mutual funds for SIP, you need to make sure you are maintaining enough funds in your account for the SIP date. You must keep investing for the whole duration of the chosen period to reap the maximum benefits from mutual funds

Investing in mutual funds comes with certain risks, make sure you understand the risks of market volatility and read the related documents carefully. Millions of people in India are choosing to invest through SIPs, make sure you get the best out of this investment opportunity.

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