SIP Investment – Steps to Know How to start SIP investment plan

SIP Investment – Steps to Know How to start SIP investment plan

How to Start SIP Investment

Investors are always in search of new investment avenues to park their savings. They want to invest in those investment options that are less risky and have the ability to generate consistent returns for the long term. One of the investment avenues that can fit into almost all the criteria for an investor is investing in mutual funds via a Systematic Investment Plan (SIP). In this article, you will learn about the basic details of the SIP and its related information.

First, let us understand the meaning of Systematic Investment Plan.

What is Systematic Investment Plan?

SIP is one of the simplest forms of investing in the mutual funds. You need to decide the SIP investment plan, an amount that you would like to invest regularly. The investment in the chosen SIP can be made in instalments on a weekly, monthly or quarterly basis. A fixed amount is deducted from the savings account and directed towards the mutual fund scheme selected by you.

Let us now learn about how to start SIP investment.

How to Start SIP Investment

Systematic Investment Plan is the most flexible and easiest way of investing in mutual funds. Once you figure out how much money you would like to invest in the SIP investment plan, the task becomes even easier.

Often you want to invest big in the mutual fund schemes but lack of funds do not allow you do so. This is where mutual fund SIP investments are handy as you can invest small amounts at regular intervals. This further makes you a disciplined investor. The procedure for an SIP investment plan is as follows:

Procedure to Start Systematic Investment Plan

Step 1: Complete Your Know Your Customer (KYC)

The first and foremost step for mutual funds SIP investment is completing the Know Your Customer formalities. To be able to invest in a SIP investment plan you must be KYC compliant. You must complete all the necessary paperwork and submit the following documents:

  • Address Proof (driving license, passport, Aadhaar card, voter id, etc.)
  • Passport size photograph
  • PAN card
  • Cheque book (for bank details)

For online SIP investment, you may visit the website of a renowned broker such as IndiaNivesh Ltd. that provides the facility of electronic KYC, i.e., eKYC. During the eKYC process, you must upload the necessary documents on the respective website.

You can even complete your KYC through in-person verification. For that, you will have to schedule a video call appointment and confirm your identity through webcam. At this stage, you can get your details verified by showing your PAN card and address proof.

There is one more option through which you can complete your KYC. You can use your Aadhaar card and complete the process. For that, you need to comply with the following steps:

  • Fill your Aadhaar number
  • Enter the one-time password (OTP) sent to your linked mobile number
  • The basic details would be filled automatically after OTP submission
  • No video call verification is required

With the Aadhaar based KYC, the maximum limit for investment is Rs. 50,000 every year. To enhance the limit, you must submit your PAN card details.

KYC compliance is a one-time procedure and once it is completed, you can invest in any mutual fund scheme.

Step 2: Select Mutual Fund Scheme

After completing your KYC, the next step is the selection of a mutual fund scheme. While selecting the mutual fund scheme the following points must be considered:

  • Duration of the investment
  • Level of risk tolerance
  • Financial goals
  • Experience of the fund manager
  • Track record of the Asset Management Company
  • Performance of the fund
  • Consistency of the fund in giving returns
  • Fund’s expense ratio

Note that the above-mentioned points are not in the order of importance.

Selecting a mutual fund could get easier if you have your demat and trading account with a reputed stock broker like IndiaNivesh Ltd. because we offer hassle-free services and continuous support to the investors.

Step 3: Register for SIP

The next step is the registration of the SIP mutual fund scheme. You can register for online SIP investment by selecting the link for registration of a new account and filling the form. Create an ID and password for mutual funds SIP investment. Give the details of the bank account from which money will be debited.

The above mentioned steps will help you in starting a Systematic Investment Plan. However, there are many misconceptions in the mind of investors when they start an SIP. Let us now clear some of the misconceptions about SIP.

Misconceptions about SIP

  • Avoid Investing in SIP when Market is High

Often investors believe that it is better to avoid SIP investment when the market is high. Investors feel that they can purchase only few units of the mutual fund scheme when the market is high in comparison to the number of units they could have purchased when the market is low for the same amount of money. However, this should not be the approach. SIP is a disciplined way of investing. Investors should never try to time the market. By investing in all the phases of the market, investors get the benefit of rupee cost averaging.

  • SIP gives Low Returns as compared with lumpsum investments in same mutual funds

The investors who believe that SIP as compared with lumpsum investments in same mutual funds gives low returns are wrong. In fact, in many cases, SIP has the potential to outperform lumpsum investment options in terms of giving returns because many things can go wrong if you do not time the market well.

  • SIP in mutual funds has to be with large sum of money

One of the myths about SIP is that it needs a large sum of money. However, this is not true. You can start an SIP with an amount as low as Rs. 500.

The above mentioned points clear some of the misconceptions that people have about Systematic Investment Plan.

SIP is one of the most flexible types of investment which can be updated or cancelled anytime. There are many advantages of taking an SIP in comparison with investing a lump sum amount. If you are looking to invest in SIP or need to know the best SIP plans, you can contact IndiaNivesh Ltd. We recommend SIP plans after understanding your financial goals and risk appetite. With our advice and guidance, you can invest in right mutual fund schemes.


Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.


Five questions to ask before you invest in an IPO

Investing in equities is one of the best ways to grow your capital to reach your financial goals. You can either invest in equities through the secondary market, where you buy shares that are already traded in the market or you can invest in the primary market through an IPO or Initial Public Offer. IPO investments are generally considered very risky since the market has not evaluated the performance of the company. In some cases, the shares lose their value on getting listed and that may take years to recover. However, there are benefits to this as well. The company shares may skyrocket in sometime and you may earn huge profits as well. It is possible to make smart investment in IPOs by asking a few questions before you invest. IPO investment is not simply investing in a popular issue. It is a legitimate way to increase your earnings through capital gains and dividends. This is why it is better to know the company before putting your funds in it. Here are 5 questions to ask before you invest in an IPO: 1. Company financials:Before putting in your hard earned money in an IPO investment, it is important to look at the company financials. There are a few indicators that you can check as a potential investor: Sales, operating profits and net profits quarter on quarter Expenses and composition of expenses such as sales expenses, administrative expenses, depreciation Debt levels Assets Cash and cash equivalent balances among others To evaluate the performance of a company, there are certain financial ratios that you can calculate. These ratios measure the performance of the company in terms of utilisation of assets, composition of assets, financial health etc. Some important ratios to calculate are: Debt equity ratio which calculates the ratio of debt and equity in the company’s balance sheet. The ideal debt equity ratio is 2:1, which means the debt should not be more than 2 times the equity of the company. Return on Equity ratio measures the income earned for the shareholders. This ratio can be compared for each year to find out whether the company is growing its earnings. Current ratio measures the ratio of current assets to current liabilities. This helps to understand whether the current assets will be enough to meet the current liabilities when they fall due. The ideal current ratio should be 2:1 at the least. Quick ratio measures the quick assets i.e. current assets without illiquid assets such as inventory and debtors against current liabilities. The ideal quick ratio should be 1:1 ideally. By evaluating these ratios, you can get an idea about the financial performance and health of the company. This can help you decide whether the investment is worthwhile or not. 2. Peer performance:This is a crucial indicator while making an investment decision. Peer performance should be evaluated in a similar manner to the company’s performance i.e. by checking financial ratios and the expense and income figures. An important part of this analysis is to also look into the sector in which the company is operating. If the company is operating in a distressed sector, or a sector facing a lot of structural issues, it is probably better to avoid investing in the IPO and decide to invest at a later date. 3. Share valuation:Each company that is about to list puts out its share valuation. There are different types of issues; fixed price issues where the price is decided and a book building issue. In the book building issue, the share price is usually set up as a price band and the final price depends on the different bids received. The cap price is a maximum of 20% of the floor price. The company has to disclose the basis for valuation of shares in their prospectus. The prospectus is available on the stock exchange websites and on the company website. 4. History of the company:This doesn’t refer to just the financial performance of the company. It also refers to how the company grew to its present size. It also includes information about the company promoters and the current management team. A company’s management can go a long way in determining its future success. One way to find out about the history of the company and its current and future growth potential is to read the annual reports of the company. As a part of the Director’s Report, there is generally an exhaustive summary on the company’s past and an outlook for the future. It also briefly touches on the management. It is important to look at the number of directors in the company, especially independent directors. The reason for doing such exhaustive fundamental research is because a strong management team will ensure funds are used properly to grow the company. 5. Fund usage: As per SEBI rules, a company that wants to list its shares on the stock exchange has to disclose the usage of funds in the prospectus. It is important to verify the reason for the company’s listing. A listing is essentially a fundraising exercise. If you’re recommended investing in a particular IPO, you can question before investing in IPO. Most companies use the funds for their growth and expansion. Besides the above 5 factors, there are numerous other small points that you may want to consider before investing in an IPO. Wondering where you can find these? Well, you can refer to the research reports by experts in the field. You can find such reports from IndiaNivesh Ltd. and you can get them by opening an account with IndiaNivesh Ltd. If you’re wondering how to invest in IPO in India, there are two ways: Offline investment Online investment In an offline investment, a form needs to be filled up by the investor and share ASBA account details. This needs to be submitted to your broker who will enter it in the system and submit your application. Online investment in an IPO is possible through your trading account. If you’re thinking on how to invest in IPO online then you can check your online trading account for an option to put in a few lots. Once the issue is closed and shares are allotted, the money will get debited from your bank account. By making sure you do adequate due diligence, you can ensure you use an IPO to grow your capital.     Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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Stock Market Investment - Do’s and Don’ts of Stock Market Investing for Beginners

Do’s and Don’ts of Stock Market Investing for Beginners Making money in the stock market is an art. Often people enter in the share market and invest money without a disciplined approach. Likewise, beginners often speculate and bet on the stock hoping that the price will go up. However, this is not the right approach for stock market investment. To help the beginners with stock market investment, we suggest some of the stock market investment tips that they can follow to be successful in the market. This mini stock market investment guide will enhance your knowledge on the basics of the market and make you an informed trader or investor. Things to do in Stock Market• Learn and InvestAs a beginner, the first thing you must do is to acquire sufficient stock market education and learn more about it. Self-education is the best education here. Start with the basic concepts and information. By doing so, you will understand how to do stock market investments. • Take Small StepsAs a beginner, you must start with small investments in the stock market. When you get sufficient knowledge and confidence, gradually increase your stock market investment. This approach will make you a successful and better investor in the long run. • ResearchOne of the important stock market investment advice for beginners is to invest in shares after a good research. Beginners must research about the fundamentals, financials, management and many other areas before making any investment. • Keep a Check on EmotionsStock market investment requires a practical approach. Decisions taken on the basis of emotions can prove to be fatal. Often beginners make decisions out of panic and book losses. This must not be done and a check on emotions in the stock market is compulsory. • DiversifyAnother important stock market investment tips for the beginners is to diversify their portfolio. It is always recommended to not put all your eggs in the same basket i.e. not invest all money in a few stocks. Diversifying the portfolio protects you from loss in one sector against profit in another sector. • Invest Surplus OnlyIt is always advisable for the beginners to invest only their surplus money in the stock market. This is because the stock market is volatile, risky and returns are not guaranteed here. Therefore, only that portion of money must be invested in the market which will not affect your regular lifestyle. • Have Investment GoalsThe investor must invest in the stock market with an investment goal. It is important that the beginners must have a future plan in mind while investing. He must know what he expects out of his investment and the time period of the investment. An investment with a goal helps you in building a good portfolio and creating wealth for the future. The above-mentioned are a few things that a beginner must do in the stock market. Now let us learn about the things that a beginner must not do in the stock market. Things Not to do in Stock Market• Don’t Invest on TipsAn important stock market investment advice for beginners is that they should not buy shares on the basis on tips. Any recommendation or tips from near and dear ones must be ignored. Beginners should invest in shares only after conducting their own research and analysis about the company. • Avoid Herd MentalityNever invest in shares looking at what most of the people have purchased. It does not matter how much returns others have generated with the investment. Your investment decisions must be based on your own research rather than following what the crowd is doing. • Avoid Unnecessary RisksAs a beginner, you are learning about how to do stock market investments. You must avoid investing in high risk shares in the hope of high returns. The greed of earning quick money often forces you to put money in stocks that have lot of associated risks. • Avoid Stocks You Don’t UnderstandAnother important stock market investment tip for beginners is that they must avoid investing in stocks which they don’t understand. Beginners must take time to understand the business of the company and invest only after knowing its full profile. Investing after analysing the future performance of the company will help you in making higher returns. • Avoid Overtrading As a beginner and an investor in the stock market, your aim is to invest money for the long term. You must avoid taking intraday trades because that is for people looking for short term gains. Moreover, overtrading often results in capital erosion and huge losses. As an investor, you must analyse the company and take a long term bet. The above-mentioned points act as a stock market investment guide for beginners. If you are a beginner and want to invest money for the long term, you can open a demat account with IndiaNivesh. Our in-house professionals and experts help you in making a diversified portfolio after understanding your risk appetite and duration of the investment.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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It is the central bank of India entrusted with the formulation of monetary policies, credit policies, and foreign exchange policies, among others. Banks and financial institutions have to abide by RBI's rules and regulations to work in the financial market. Securities and Exchange Board of India SEBI is the primary regulator of the capital market, which consists of both the primary as well as the secondary capital market. Trading done in the capital market is governed under SEBI's rules and laws. Insurance Regulatory and Development Authority IRDA governs the rules and regulations which are to be followed by insurance companies and their intermediaries. Thus, IRDA is a regulator of the insurance market, both life, and general insurance market. Financial markets today have evolved and have become quite competitive with the participation of multiple players. They directly play a part in the growth of India's economy and allows investors and borrowers to trade in financial products and services in an easy and smooth manner. To take advantage of the Financial markets and varied investing opportunities, consider the team at IndiaNivesh, which is well-versed with types of markets and regulatory bodies.   Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.

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  • SIP – Different Types of Systematic Investment Plans in India

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  • Know What is Pre-Market Trading & How it Works in Share Market

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The core objective behind having a pre-market trading session is to stabilise the market especially when heavy volatility is expected due to some overnight major events or corporate announcements. These could be election results, reforms or new economic policies, declaration of mergers and acquisitions, delisting of shares, open offers, change (especially downgrading) in credit ratings, debt-restructuring, market rumours etc. The additional 15 minutes allows the stock markets to arrive at the right premarket stock price and not get carried away by external events or announcements. In India, premarket future or options trading is not permitted. Pre-market Trading Session – Breakdown of the 15 minutes The premarket trading period can be further bifurcated into three slots:Order Entry or CollectionThe Order Entry session starts at 9:00 am and lasts for eight minutes. The following activities are undertaken during this timeframe Placing of orders for purchase or selling of stocks Changes or modification in orders Cancellation of orders After 9:08am (i.e. completion of order entry session), orders are not accepted by the stock markets Order MatchThe Order Matching session starts at 9:08am and continues for the next four minutes. The following activities are undertaken during this timeframe Confirmation of orders placed during the Order Entry session Order Matching Calculation of stock opening price for the regular session that starts at 9:15am During the Order Match session, one cannot buy, modify, cancel or sell their orders. Limit orders (i.e. order quantity and price is specified) are given priority over the market orders (order quantity and price are not specified) during the execution time. Buffer TimeThe last three minutes of the premarket trading session (i.e. 9:12 am to 9:15 am) is considered as buffer time. This period is used to ensure a seamless transition to regular trading hours. Any abnormalities from the previous two slots are addressed during this time.   Calculation of Opening price during the pre-market stock trading session The opening price of the stock during this session is determined during the second phase i.e. Order Match session. It is done with the help of a specific methodology. This calculation method is referred to as the call auction methodology or the equilibrium price. The stock price which corresponds to the maximum quantity of tradable shares is known as the equilibrium price. It is a factor of demand and supply. The orders placed during the first eight minutes are matched at the equilibrium price and then traded accordingly. Some scenarios: If the highest tradable quantity corresponds to two different stock prices, then the stock price with the lower unmatched orders is taken as the equilibrium price. For example:   Stock Price Order (Buy) Order (Sell) Demand Supply Max Tradable Quantity Size Unmatched Orders (Demand minus supply) 105 1275 1160 25000 20000 20000 5000 99 2000 8000 20000 30000 20000 -10000   Though the maximum tradable quantity is same in both the cases, the equilibrium price will be considered as 105 as it has a minimum unmatched order size If the values of the highest tradable quantity and unmatched orders are same or equidistant, but they correspond to two different stock price, then the above methodology cannot be applied. In this case, the equilibrium price is taken as the stock price which is closer in value to the closing price of the previous day. For example, Stock Price Order (Buy) Order (Sell) Demand Supply Max Tradable Quantity Size Unmatched Orders (Demand minus supply) 105 1275 1160 25000 20000 20000 5000 99 2000 8000 20000 25000 20000 -5000 Assuming the closing price on the previous day was Rs. 110, then the equilibrium price in the above example will be Rs. 105.   What about orders that remain unmatched or are not traded in the pre-open session? Orders that are not traded or remain unmatched are carried forward to the general trading session. The opening price of these orders is determined in the following manner: Limit Orders i.e. orders wherein the price and quantity are already specified are carried forward at the same mentioned price Market Orders i.e. orders wherein the price and quantity are not specified are carried forward at: If the opening price was ascertained during the pre-open trading session but order not traded, then at the determined price If the opening price was not discovered, then they are carried forward at the previous day’s closing price   Stock Markets tend to be overwhelming for many investors. The concept of premarket trading can further compound the complexity level. However, as an investor, you should always remember that help is just around the corner. Professional experts like IndiaNivesh can help to simplify and demystify the entire process. The team at IndiaNivesh keeps a close eye on this Pre-market session to comprehend the mood and strength of the stock market. They track the pre-market stock prices and take the best decisions for your portfolio basis the market sentiments. Moreover, since they offer a wide range of services (broking, mutual funds, institutional equities, private equity, strategic investments, corporate advisory, etc.) they have a holistic view of the market and the economy. Their expert opinion can help you to amp up your investment game. You can read more about their offerings, vision and accomplishments on their website "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."

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