One of the most common reasons people give for not having started to invest is not having enough money. But just think about it. How much was that last cup of coffee you bought in a café? Or your monthly subscription to a streaming site? The thing is that if you can set aside even Rs. 500 per month, you can begin investing right away in mutual funds through the Systematic Investment Plan (SIP). And the best part is you can start investing in a SIP online – the process is quick and seamless.
Things to do before starting a SIP online
- Think of your financial goals – the amount you need, the time you have to achieve that goal, etc. – and pick any one specific goal for which you are starting your SIP investment.
- Do some research on the types of mutual funds out there – equity, debt, balanced, etc. – and figure out which one suits your goals and risk tolerance. You can also consult a financial expert who can guide you on this so that you don’t delay starting your SIP.
- Whether you pick the mutual fund yourself or it is recommended by your financial advisor, make sure to check a few things before you begin to invest. These include the fund’s objective, its past performance, the fund manager and their experience, the expense ratio, the asset allocation, etc.
Steps to start a SIP online
- Go on the website of the Asset Management Company (AMC) of the fund you have narrowed down on and create an account with your name, phone number, and email ID.
- Select the mutual fund you want to invest in. You will be shown two options – lumpsum and SIP. Choose the SIP option.
- You will then be asked to choose between the growth option and the dividend option which will be termed as IDCW (Income Distribution cum Capital Withdrawal).In the growth option, if the underlying stocks pay dividends, you won’t receive them, but they will be reinvested back in the fund. Conversely, if you opt for IDCW, you’ll receive dividends.
- Set your SIP amount and frequency. With some mutual funds, the minimum SIP amount can be as low as Rs. 100 and there is no maximum limit. But make sure to select an amount that you can sparer egularly at your chosen frequency. The frequency can be weekly, monthly, quarterly, or bi-annually.
- Another thing you can opt for when starting your SIP online is the SIP top-up option. This option allows you to increase your SIP amount by a certain percentage, such as 10%, 20%, 50%, etc., or by a specific amount. If you opt for the top-up option, you will also get to select the frequency – half-yearly or yearly – that this top-up will be initiated at. It can be a helpful feature since it will allow you to increase your investment amount as your income increases to reach your investment goals faster.
- Finally, you will have to complete your KYC for which you should keep these documents handy – PAN, address and ID proof, and a copy of a cancelled cheque. The KYC can be either through your Aadhaar and the phone number linked with it or through a video KYC.
For your SIP to be registered, it might take anywhere between five to 15 business days depending on the AMC. Once you’re through with this process, you can also invest in other mutual fund schemes offered by this specific AMC. In case you face any issues while starting your SIP online or have any specific questions regarding the process, you can reach out to AMC’s toll-free number for on-call help from their customer service representative.
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