How to start an SIP?

You must have heard the story of the hare and the tortoise as a kid. Now that you’ve grown up and seen a bit of the world, what do you think of the adage that always goes with this story, ‘Slow and steady wins the race’? Don’t you think it holds true for every aspect of life including money matters. Let’s see how the hare and tortoise story applies to our money and especially investments.

What is an SIP?

Before that, let’s check if you’ve heard of SIP or Systematic Investment Plan. It’s the tortoise’s way of building wealth over the long-term so that even if you put in a small amount every month, you could be better off than investing big sums occasionally. SIP allows you to regularly invest a small amount in a Mutual Fund every month on a specified date.

How to invest in SIP?

Now moving on to the hows of SIP investments, let’s first look at the mandatory requirements. As per SEBI guidelines, all investors need to be KYC compliant for investing in a Mutual Fund scheme irrespective of the investment value. Let’s explain how you can become KYC compliant.

You need to submit the KYC form and the Common Application form (CAF) of the Mutual Fund you wish to invest in for first time investment along with a cheque of Rs.500 for SIP. You need to submit a few other documents like attested copy of PAN card, address and identity proof and passport photographs to complete your KYC.

Once you are CKYC registered, you can start investing in any Mutual Fund scheme of your choice without undergoing further verification. You can invest directly in a fund through its website or app or you can invest through a distributor which could be through online or offline mode. The SIP amount is a fixed amount that you’ll have to invest every month on a pre-specified date. You need to decide on the SIP amount and the length of the SIP in terms of months or years depending on the goal you have in mind. You investment can also be as low as a SIP of Rs.500 per month. You can invest a higher SIP amount if you wish to.

For more info on SIP 500 per month, visit: https://www.mutualfundssahihai.com/en/can-i-start-rs-500-and-keep-adding

Are you already thinking what a cumbersome process it is to deposit your investment every month? What if you forget to deposit the monthly SIP amount? Firstly, no, it’s not as cumbersome as you are thinking. Secondly, all you need to do is give a standing instruction to your bank for the SIP amount to be debited automatically from your account and credited to the Mutual Fund scheme. That’s about it.

The above process is suitable for someone who can handle it all by himself/herself online. If you feel you can’t do it yourself, you can always reach out to a Mutual Fund distributor who can not only help you with the KYC verification process but will also help you set-up the SIPs as per your financial goals. Instead of creating a standing instruction online, you will have to submit an auto-debit form that will authorize your bank to debit the monthly SIP amount and credit it to the Mutual Fund scheme.

SIPs help in creating wealth over the long-term as returns from the initial investments compound over time. This is also called the power of compounding. Isn’t it a simple process that is worth a trial since we’ve now taken you through the process of how to invest in SIP, the different ways to start a SIP and the benefits of SIP.

So, what are you waiting for? It’s time to get started with SIP. If you are still unsure, then don’t forget that all you need to start a SIP of Rs.500 per month is to spare Rs. 500 from your monthly spends. It’s that light on your wallet!

For more info on how to invest in SIP, visit: https://www.mutualfundssahihai.com/en/what-systematic-investment-plan-sip