Systematic Investment Plans or SIPs are gaining popularity with investors. For those of you who are unaware of a SIP, here is an overview.
There are various ways in which you can invest in Mutual funds. A SIP is a planned approach towards investments where you invest a certain fixed amount at regular intervals in a mutual fund. Many young professionals are opting for this mode of investment as it helps inculcate the habit of investing in a disciplined manner.
With an ever-increasing dearth of time, banks and mutual fund houses have started offering option to start a SIP online. Here is what you need to do:
The Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) have mandated certain documents that you need to submit before opening any financial account with a bank or a financial institution. Some of them include:
- A photograph
- PAN Card
- Address Proof (Passport, driving licence, bank statement)
- Cheque Book (for bank details)
These documents can vary depending on the institution through which you are planning to open the account. Having an Aadhar number, though not compulsory, can help ease the process.
It is mandatory to comply with the Know Your Customer (KYC) requirements for investing in mutual funds. Basic information like name, date of birth, mobile number, address, etc. must be provided when asked for. This is a one-time process that needs to be followed even if you make multiple investments. Most Fund houses provide the facility to fulfil the KYC compliance online. You can visit the website of any such fund house to begin the process. Alternatively, you can visit the website of the Registrar and Transfer Agents for the same. Fill in the basic information and upload the copies of the required documents to start the process of registration. Some institutions follow this up with a video call as a confirmation of your physical presence.
Start the SIP online
Once you have fulfilled the KYC compliance requirement, you can visit the website of the fund house that you want to invest in. Typically, you would be asked to create a ‘New Investor’ account which would require you to fill in your basic details and create a ‘Username’ and a ‘Password’. You will also be required to enter your bank account details to set up a debit and credit mechanism. Once this is done, you can log in with your username and password, select the scheme you want to invest in, choose a date and amount of the SIP and you will be on your way to a systematic investment.
You must ensure that you understand the documents required by the institution that you are registering with. Also, understanding the terms and conditions and charges involved will help you avoid loss of revenue in the future. Being prudent in investments can help ensure a better planned financial future.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.