Systematic Investment Plan (SIP) has gained a lot of attention in the investment world, and mutual fund investors are increasingly choosing to invest in mutual funds through SIP. There are two ways how to start sip: you can do it online on your own or with the assistance of a mutual fund distributor. The process for how to start to sip online, however, may still be unclear to many investors.
Advantages of how to start sip
1) Compounding’s power
When your investment returns start earning more returns, this is known as compounding. In theory, this is a straightforward idea. But there are significant practical ramifications.
When you make regular investments through SIPs, your profits are reinvested. This creates a snowball effect over time, which could greatly boost your potential returns. Investments made over a long period of time are the best way to maximize this gain. This also implies that investing and how to start sip investments as soon as possible may be advantageous.
2) Minimal initial outlay
With just Rs. 500 per month, you can start a SIP to invest in mutual funds. This may be a practical way to put money aside each month without breaking the bank. Through the SIP step-up feature, you can increase your monthly investment amount as your income grows. Investors are able to regularly top up their SIPs through mutual fund houses. As a result, even if you begin by setting aside Rs. 500 or Rs. 1,000 each month, you can eventually invest more. You could use this method to accelerate the completion of how to start sip investment objectives.
3) Average dollar cost
With rupee cost averaging, you buy more units when the fund’s Net Asset Value (NAV) is low and fewer units when the NAV is high. In essence, it averages your cost of purchases over the course of the investment period. When you invest through a SIP, you don’t have to be concerned about market timing. You can simply start with the sip in zerodha and easily start your investing journey as it is safe.
Also Read: Mutual Funds Are Subject To Market Risk
4) Practicality
SIP is sometimes a practical way to invest. Like the majority of investors, you might not have the time to conduct in-depth market research and analysis in order to modify or balance your portfolio. So, after selecting a quality fund, you can give the bank standing instructions and let the SIP handle your monthly investments. You will get more options and easy ways to start sip online.
As more digital platforms have emerged, investors may now find it simpler to open a SIP account online than they would through the more conventional method of filling out an application form. Actually, you can open a SIP account online while seated in the comfort of your home. If you are open to going with the how to start sip in zerodha option then you too have to complete the KYC procedure. Please be aware that KYC is a necessary prerequisite for opening an SIP online. To be KYC compliant, provide proof of your address, having a PAN card, etc. The steps one must take are as follows:
Step 1: Gather the required paperwork to start sip
As previously stated, the investor requires a PAN card, address documentation in the form of a driver’s license, bank statement, or utility bill, a passport-size jpg or PNG image, and a check for the bank details.
Step 2: Adhere to KYC compliance to start sip
Once the paperwork is prepared, the investor can complete the KYC process through any AMC or RTA website that offers an e-KYC facility. eKYC is the name given to online KYC. The investor must submit basic information for e-KYC, including name, date of birth, mobile number, and address, as well as upload a copy of their address proof, PAN, identity proof, and passport-size photo online. To confirm the specifics, an IPV (In-Person-Verification) video call is necessary. The investor must complete the FATCA requirements by responding to the necessary online questions in addition to completing their KYC. You can complete the KYC online with the how to start sip online option.
Step 3: Log in to the AMC website and register.
Following completion of the first two steps—organizing the required documents and completing the e-KYC—the investor must now follow the instructions below to begin an online mutual fund SIP.
The investor should click on the “Register Now” or “New Investor” tab on the fund house website if he has completed e-KYC there. The investor will then be asked for their PAN number, personal information, nominee information, bank information, and a few FATCA questions. Following this, a User ID and password are generated for online transactions during the start mutual fund sip process.
Also Read: What are the advantages of HDFC retirement savings fund?
Step 4: Choose your investment amount, scheme, and option during how to start the mutual fund sip process
Once more, this is a crucial step where the investor specifies the SIP amount and selects the scheme name. Additionally, the scheme plan and options must be chosen by the investor. Investors generally have a choice of growth, dividend payout, or dividend reinvestment options when choosing between regular plans or direct plans. Please be aware that if investing in an ELSS scheme, an investor cannot choose the dividend reinvestment option.
Step 5: Choose a payment method and a date
After deciding whether to invest in a SIP on a daily, weekly, monthly, or quarterly basis, the investor must choose a date or dates and make the payments for the first SIP installment. This data must be carefully selected. The investor must now decide on a payment method. There aren’t many choices because the money can be automatically deducted from the investor’s account by signing up for an OTM (one-time mandate), net banking, or NEFT/RTGS payment.
Step 6: Submit Transaction
The investor completes all the information online and submits it to the AMC. An acknowledgment is sent via email and SMS by the AMC. The investor receives an email with the investor’s SOA (Statement of Account) if the transaction is submitted before the deadline for the particular scheme.
Generally speaking, the next SIP date can be any day between 15 and 21 days (depending on the AMC) after the initial investment date. Prior to the next SIP installment due date, the AMCs notify the investor via SMS and email.
Please be aware that if you are already KYC compliant for mutual funds, you can visit the AMC website, enter your PAN number when prompted, and the AMC will check your status before allowing you to open an online SIP account.
Conclusion:
Why not choose the straightforward method to begin a SIP in mutual funds now that you are aware of how to open a SIP account online?
A project by Mirae Asset Mutual Fund to promote investor education and awareness.
Investments in mutual funds are subject to market risks; carefully read all documents pertaining to the scheme.
FAQ on How to start sip
1. Describe the SIP.
Ans. A SIP enables an investor to make a set amount of investments on a regular basis in a mutual fund scheme, usually an equity mutual fund scheme.
2. Why should you make a SIP investment?
Ans. One benefit is that it teaches you how to manage your money.
3. How much cash do I require to launch a SIP?
Ans. Most mutual fund schemes allow you to begin investing via SIP with as little as Rs 500.
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Hello there, my name is Phulutu, and I am the Head Content Developer at Nivesh Karlo. I have 13 years of experience working in fintech companies. I have worked as a freelance writer at Policybazaar, Paytm Money, Investopedia, and others. I love writing about personal finance, investments, mutual funds, and stocks. All the articles I write are based on thorough research and analysis. However, it is highly recommended to note that neither Nivesh Karlo nor I recommend any investment without proper research and read all the documents carefully.
