The Systematic Investment Plan option is offered by mutual funds to investors wanting to invest in a disciplined manner at regular intervals. The SIP option is highly convenient since you can give your bank a standing instruction to debit the amount every month or week or a quarter as decided by you. Here we talk about how to start SIP investment and the steps involved in it.
Selecting the Mutual Fund Scheme
The first step in your journey of SIP investing involves selecting the mutual fund that you wish to invest in. This decision is dependent on your investment goals, risk appetite, the type of financial instruments in which you wish to invest, and some good research about the options available. Compare the different schemes that fit in with your investment goals and choose the one with the best performance, low expense ratios, and a good and experienced fund manager.
Complete the KYC Process for Mutual Funds
Once you have zeroed in on a scheme that you wish to invest in, you need to complete the KYC formalities. This requires you to fill the mutual fund KYC form and submit it along with the necessary documents to prove your identity, address and other details. This process is compulsory for every mutual fund investor and involves the submission of the filled-up KYC form along with a copy of your PAN card, address proof document, passport size photograph, and details of your bank.
You can also complete the process online by visiting the website of the fund house or the online portals of the registrar, and transfer agents for KYC and uploading all the documents. The online submission of documents has to be followed up by verification of your identity and documents over a video call.
In case you wish to invest an amount of Rs 50,000 or less annually, you can complete the e-KYC process by providing your Aadhar card details with no requirement of a video call verification.
Register with a Mutual Fund
Now that your KYC is complete, you can register with the chosen mutual fund by visiting its website, and filling a form and providing your details. You will be asked to fill in a user ID and password to facilitate online transactions in the future. You will also need to provide the details of the bank from where the SIP payments are going to be debited. Once the process is completed you will get a confirmation about the opening of your account. The fund will also notify you when you can start investing.
Finalize the SIP Amount and Duration
Just like filling the mutual fund KYC form is compulsory, specifying the SIP amount and duration is a must for starting the SIP. Choosing the right amount is important for the building up of the desired corpus and achievement of the financial goals for which you have decided to take this SIP. The amount that you wish to invest should be finalised after a careful review of your finances. Commit an amount that you will be able to invest easily rather than putting in a figure which may create financial trouble for you later. Also, since SIP investment is generally made to achieve a financial goal, quantify the goal and use a SIP calculator to find out the amount that you will need to invest to achieve the goal. The SIP starts a month after you complete the process.