The total influx of Systematic Investment Plan (SIP) contributions in the year 2023 stood at ₹ 1,83,741 crore, which is an indication of the popularity of SIPs as a mode of investment in India. Investors can know the stepwise procedure to invest in SIPs by following the guide mentioned in this article.
A step-by-step guide to investing in SIPs:
Here is a stepwise guide that an investor can follow to invest in one of the best mutual fund schemes to gradually grow their wealth over time:
- Investors must collect all the necessary documents for an SIP investment: To make an SIP investment, investors require a specific set of documents, such as their Aadhaar card, PAN card, and address proof. They must also double-check the details of their banking account like their bank account number before submitting their documents.
- They must complete the KYC procedure: The Know Your Customer (KYC) procedure is a procedure that every investor must follow before investing in an investment scheme. They must complete an application form at any of India’s authorised banks or post offices to do the same. The form contains personal details such as the investor’s name, address, photo ID, and the details of their driving license or passport along with an expression of their investment.
Investors must sign up for an SIP plan and choose the one that best fits their needs: As the next step, investors must select an SIP plan that helps them achieve their investment objectives in the most effective way possible. While selecting an SIP plan for a mutual fund, investors should check important details of the mutual fund such as its Net Asset Value (NAV) and its past performance.
- Next, they must decide on an investment amount and select an SIP date: As the next step, the investor must decide on the monthly investment amount and select an SIP date, that is the date on which they wish to make SIP contributions to a mutual fund.
- Finally, the investor must submit their SIP form: If an investor has a demat account, they can submit their SIP form online. Investors can also submit their SIP forms via a post office or a bank.
Tips for making an SIP investment:
Here are some points that you must consider before making an SIP investment in a mutual fund scheme:
- Decide on an investment horizon and jot down your investment objectives: It is advisable for investors investing in any scheme to note down their investment objectives before doing the same. Furthermore, you should decide on an investment horizon to time your investments.
- Analyse your risk-taking capacity: You must analyse your risk-taking abilities before investing in any mutual fund scheme. It is also recommended that you keep reassessing your investments to make any changes as and when required.
- Use an SIP returns calculator to plan your investment: You can also use an SIP returns calculator to plan your investments in advance. Using an SIP returns calculator can also help you plan for your other expenses besides your SIP investment.
Investors can follow the step-by-step procedure detailed in this article to start an SIP investment from scratch in 2024.