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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.