Systematic Investment Plan, commonly referred to as SIP, allows investors to invest regularly a fixed sum in mutual fund schemes. Under SIP, a fixed amount is deducted from a specified savings account every month towards a mutual fund chosen by the investors.
According to personal finance experts, investing through SIPs is the best way to invest money in mutual funds for monthly salary earners.
"SIPs help in injecting discipline into the investment habits. Also, these help in averaging out the ups and downs of the market fluctuations,” explains Ankur Choudhary, co-founder and CIO, Goalwise - a mutual fund investment platform.
To start a mutual fund SIP, investors should first consult their financial advisors who can help in assessing the suitability of mutual funds from various categories that meet investor’s financial objective.
"They can further help investors understanding the scheme track record," suggests Mohit Bhatia, head – sales & marketing, Canara Robeco Mutual Fund - a mutual fund investment fund.
"Most AMCs provide convenient transactional portal for distributors and investors on their websites or apps which not only give the investors exactly the same options but also makes it convenient for them. In the current scenario of a virtual standstill, opening an SIP in a mutual fund is just a few clicks away," Bhatia explains.
Here are the steps to open a mutual fund SIP online:
Step 1: Complete the Know Your Customer (KYC) formalities.
"To invest in mutual funds, investors need to become KYC-compliant. Arrange for the necessary documents such as PAN Card, proof of address, passport-size photograph and cheque book (to provide bank details)," explains Kotak Securities.
Step 2: Visit the website of the fund house that offers the scheme and look for a link to register a new account
Step 3: An application form will pop up. Fill in all the personal details and contact information. Submit the form
Step 4: Now, choose a user ID and password for carrying out transactions online
Step 5: Provide details of bank account from which the SIP payments will be debited.
"Once the registration is complete and the fund house has sent a confirmation, the investment can start. Choose right SIPs that will depend on the income and expenditure, financial goals and the amount investors are willing to invest," according to Kotak Securities.
For investing, investors can log into the account at any time using the user ID and password and select the scheme of choice. They can further specify the amount that will be invested and the payment intervals.
"The SIP will start around a month after the entire process is completed," adds Kotak Securities.