Systematic investment plans (SIPs) are one of the most convenient and effective ways to make the most of your mutual fund investments. Today, several fund houses allow investors to start regular SIP investments with low amounts. And thanks to technology, starting your very own SIP online is now more convenient than ever. So, it is no wonder that SIPs are a rage right now, with over six crores of active SIP accounts registered across India.
Do you want to know how to start SIP investments online? Well, all you need to do is to follow the three simple steps given in this article. We will also share some tips to make an informed decision before you start your SIP. So, let’s dive in!
A systematic investment plan (SIP) is a convenient method of investing in mutual funds. When you start a SIP, you will invest a predetermined amount at regular intervals into a fund of your choice. SIPs are excellent for achieving financial goals since you contribute the same amount consistently, allowing you to steadily accumulate your wealth.
Choosing to start a SIP has many benefits, such as
A SIP’s operation is similar to that of recurring deposits. You first choose a mutual fund that matches your financial objectives and then invest in it through a SIP. When you begin a SIP, you will invest a predetermined sum at regular periods. Each time you invest, you will be assigned units of the mutual fund based on the investment amount. The number of units you are assigned is decided through a process called rupee-cost averaging. This means when the net asset value (NAV) is low, you get more units, and when it is high, you get fewer units allotted. With each SIP payment, you build up your mutual fund holdings and steadily increase your wealth.
Before you leap into mutual funds and SIPs, take some time to understand your goals and expectations. We encourage you to ask yourself these three questions.
1. What are my financial goals?
Your goal might be to buy a car or finally go on that vacation you have been dreaming about. Regardless of what your objectives are, financial planning is the roadmap to turning dreams into reality. Defining your goals will aid you in selecting the best mutual fund to reach the most critical milestones of your life.
2. What is my investment timeline?
In the simplest terms, an investment timeline is a timeframe that you define for yourself to achieve your financial goals. Imagine you wish to buy a car. Is your goal to accomplish that next year or three years from now? Based on the time you give yourself, your goals can be:
Knowing when you intend to reach a milestone will assist you in estimating how much time you have to dedicate to an investment.
3. What is my risk appetite?
There is no reward without risks, and all investments come with a certain level of risks attached. Your risk appetite tells you how many chances you are willing to take with your investment or simply how much risk you are comfortable with. This is based on your income, expenses, current loans, savings, family profile and, most importantly, your comfort level.
Mutual funds are categorised from low to high risk. Higher risks are associated with higher returns, but if you aren’t comfortable with a high risk, don’t get fooled into choosing a fund based on the promise of high returns. Pick a mutual fund that aligns with your risk appetite.
Believe it or not, unlocking the benefits of a SIP is just three steps away. To start a SIP online, follow these three steps- pick a mutual fund that matches your goals, complete your e-KYC and start a SIP.
Step 1: Select a Mutual Fund
Choosing the right mutual fund can feel pretty overwhelming because there are hundreds of options out there. The right mutual fund aligns with your goals and also performs well. This means that the mutual fund of your choice must help you reach your goals and do so within your timeline and at a comfortable risk level. Here’s how you can select a mutual fund.
1. Each mutual fund listing states the level of risk associated with it. Use this to narrow down mutual funds that match your risk appetite.
2. Check the performance of the mutual funds. To do this, you may look at how the fund performs against benchmark funds like the BSE Sensex or Nifty Index. You can also compare mutual funds against one another.
3. Lastly, check if the mutual fund aligns with your goals. We suggest using a SIP Calculator to do this. You can now find out how much and for how long you need to invest to turn your goals into reality.
Step 2: Complete your e-KYC
Since you have the perfect mutual fund, all figured out. It is time to register and fill out your e-Kyc. You can complete this process online in just a few clicks.
1. Visit the mutual fund website and complete your e-KYC. Provide your PAN, date of birth, Name, e-mail, and mobile number. You will be asked to fill in personal, address and bank details.
2. Submit your application, and you will be KYC compliant. This means you can start investing.
Step 3: Start a SIP
It’s time to invest in the mutual fund of your choice! Here’s what you need to do.
1. Select the fund, the SIP amount and the tenure that aligns with your goals and confirm.
2. If you wish, you can set up an e-mandate with your bank to automate your SIP payments.
3. In a few hours, your investment will reflect in your SIP account, allowing you to track it regularly. on our SIP app.
A systematic investment plan (SIP) is just what you need to commit to a consistent investment strategy. Once you assess your goals and select the right mutual fund, setting up a SIP is a piece of cake. What are you waiting for? Start a SIP with Tata Capital today!
To start your first SIP, select a mutual fund, and decide on an investment amount and the frequency of deposits (monthly or quarterly). After this complete the KYC process and set up an e-mandate or auto-debit facility with your financial institution.
For beginners, a SIP in a large-cap or balanced mutual fund is ideal. These funds offer stability and moderate returns, making them a safer option for new investors looking to grow wealth steadily.
To invest in a SIP for the first time, choose a mutual fund that aligns with your goals, decide on the investment amount and duration, complete the KYC process and set up an e-mandate facility with your financial institution for hassle-free investing.
Yes, you can invest ₹1000 per month in a SIP. Many mutual funds offer SIPs with flexible investment amounts, making them accessible options for regular, disciplined investing.
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28 September 2024
7 mins read
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