Sunday , September 26 2021

How To Invest In SIP Mutual Funds?

Systematic Investment Planning (SIP) is a kind of investment scheme offered by mutual fund companies. SIP allows you to invest money one-time as well as at regular intervals to buy mutual fund units. Investing in SIP brings consistency and discipline in one’s investment habits.

SIP is pretty easy once you know your investment goals and the amount you need to invest in fulfilling those goals. Starting a SIP is easy as pie – register for an account, complete KYC formalities, and you are good to go!

How much should you invest in SIP?

To answer this question, you should first set your financial goal. Be it building your retirement corpus or planning your dream wedding, funding your overseas holiday, or financing your child’s education; all goals can be achieved by starting a SIP as early as possible. Calculating how much you should invest in SIP is no rocket science. All you need to do is penning down answers to the following questions.

1. How much money do you need to fulfill your goal?

2. How much time do you have in hand?

3. How much you have to adjust the goal amount to cope up with future rates (inflation rate)?

4. How much return are you expecting?

5. How much risk can you afford?

Criteria for choosing the best mutual fund as a first-time investor

After you have answered all these questions, the next thing to figure out is which mutual funds are best suited for you. Just a simple google search will help you to get a list of all mutual funds available in India. Now while choosing the best mutual fund that meets all your needs, ensure that it should fit the following criteria.

  • The total corpus or asset size of mutual should be large. For example, you can take 500 Crores as a reference point. No doubt, there are exceptional mutual funds that don’t have 500 Crores in assets, but for a first-time investor, one should consider it as a thumb rule.

  • The mutual funds should have existed for at least five years.

  • Always go for a reputed fund house.

  • The performance of mutual funds in history should be consistent.

Procedure to start SIP Online

You can start SIP online by visiting the website of the particular fund house you are looking to invest in. You can also start SIP online by just downloading investment platform apps available on the Google Play Store or Apple Store on your device. Here are the two simple steps to follow to make your first SIP transaction.

  1. Get your KYC done

To invest in mutual funds, you need to be KYC compliant. For being KYC compliant, you need a few necessary documents like PAN Card, Address Proof, Cheque Book, and a passport size photograph. As an address proof, you can provide a copy of Driving License, Utility Bill or Bank Statement, etc.

It can be completed with the following SEBI-registered intermediaries.

  1. Fund House (Asset Management Company like Reliance Mutual Fund, SBI Mutual Fund, HDFC Mutual Fund, etc.)

  2. KYC Registration Agencies (KRA) such as

    1. CAMS

    2. Karvy

    3. CSDL (Central Depository Services Limited) Ventures

    4. NSDL (National Securities Depository Limited)

    5. NSE-owned (National Stock Exchange)

    6. DotEx International Limited.

The KYC registration process can be done both online and offline.

  • Online KYC Registration Process

  1. Create an investor account by visiting the website of a fund house or any KRA mentioned above. Fill your details and enter your Aadhaar-linked mobile number to receive OTP on it for your account verification.

  2. Upload self-attested copies of your ID Proof and Address Proof.

  • Offline KYC Registration Process

  1. Visit a branch of your chosen fund house or any of the KRA mentioned above.

  2. Fill KYC form and submit your ID & Address Proof.

Here’s how you can check if you are Mutual Fund KYC Compliant

You can check your KYC status by visiting the official website of any of the KRA as mentioned above and check your KYC status using your PAN (Permanent Account Number).

2. Register a SIP Online

Once you complete your KYC Process successfully, you need to visit the website of your fund house and look for ‘Register’ or ‘New Investor’ link. Enter your basic details when prompted and create a Username and Password for online transactions.

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