In the last 2 years, Mutual funds gain popularity among traditional investors. Systematic Investment Plan (SIP) was one of the prime reasons why mutual funds investment is booming. SIP allows the investor to invest at the ease of minimum capital investment for a long time. At a minimum investment of Rs 500 monthly, you can start SIP and earn good returns compared to the savings account interest rates. However, investment is a subject of personal choice, and requires understanding how and where to start? But, if you decided to invest in SIP, you need to start with the 5 basic steps of SIP. You can start your SIP online with the required documents. Here we have explained the 5 steps to start a SIP:
1. Define your investing goal
Before investing in mutual funds, the first step is to analyze and identify your financial goals. Determine your objectives and timetable depending on your monthly income and costs such as debt repayment, schooling, marriage, vacations, and so on. You may decide what mix of investments is ideal for you once you've defined your investment objectives and risk tolerance.
Fill out the KYC information
KYC compliance is required in order to invest in mutual funds via SIP. Fill up a KYC form with information such as your name, date of birth, address, and phone number, and send it along with a soft copy of your pan card and proof of address. If you wish, you may complete KYC online using the mutual fund house's online trading platform or mobile trading app, or through CAMS KRA (KYC registration agency). CAMS stand for Computer Age Management Services Pvt Ltd.
3. Choose the Right Mutual Fund
With so many mutual fund alternatives, you must choose the best appropriate fund for your financial goals and risk tolerance. Is it more essential to you to make long-term financial gains or to make present income? Will the funds be utilized to pay for education or to save for a long-awaited retirement? The first step in narrowing down the hundreds of mutual funds accessible to investors is to choose a goal. It is essential to obtain professional assistance from an experienced financial advisor or a mutual fund business while purchasing SIPs online or selecting the correct mutual fund scheme.
4. Select the SIP and fill the details
The next step is to clarify some important parameters about your sips, such as the frequency of your investment (whether you want to contribute weekly, monthly, or quarterly), a single date or several days to pay as needed, length, and the amount that may be changed as needed.
What is the best SIP for your requirements? It will be determined by your income and expenses, as well as your financial objectives and the amount you are willing to invest. Ask these questions How much money should you put aside? When is the best time to invest it? and What should you put your money into?
5. Begin the SIP over the internet
Once you've finalized the aforementioned data, go to the fund house's website and register by filling out the essential basic information. Look for a link that says 'Register Now' or 'New Investor.' It will ask you to complete a brief form with your basic information and select a username and password for online transactions. It will also ask for your bank account information to set up a monthly debit and handle the redemption funds. Simply enter your login and password and choose the scheme you want to invest in. You may schedule your monthly SIPs on any day that is convenient for you. After a 30-day break, the SIP will begin.