Steps on How to Start SIP Investment

Steps on How to Start SIP Investment


Systematic Investment Plan (SIP) is an instrument that allows you to invest a fixed sum of money in an investment fund, at regular intervals; instead of a lump-sum investment. It helps you invest in a very disciplined manner.

With disciplined and systematic investments, your can potentially build wealth over the long-term. This is made possible by the power of compounding and Rupee-cost averaging. An SIP also allows a great degree of flexibility in terms of choosing a payment style. For instance, you can pay on a month, quarterly ,or annual basis.

In case you wish to buy an SIP, here’s a brief guide on how to start an SIP investment. To find out more, read on.

Assess Your Risk-Appetite

An SIP can help you meet your financial goals and aims at creating wealth in the longer run. However, you need to consider your risk appetite when choosing the investment amount. While investing in SIP, you should remember that it invests your funds in mutual funds which are subject to market risk. Hence, you should assess your risk-appetite and invest accordingly.

Choose a Mutual Fund to Invest

The SEBI guidelines’ classification of different funds according to their respective risk levels will help zero down on a compatible risk bracket. You can compare different funds by looking at their performance in the past few years. This will help you narrow down on a suitable fund. If you are wise with your choice you can get benefits on tax. For instance, an ELSS is a great tax saving fund. However, find out what an ELSS scheme is before you invest.

  • Having decided on a fund, you will have to fill up an application.
  • Submit a check of your monthly SIP amount or Fill up the ECS form for online mode.
  • Provide a cancelled check.
  • Provide your residential proof.
  • Provide PAN copy.
  • Provide a KYC form.

Select a Date for SIP

Next you will have to choose a date for SIP auto-debits, towards the monthly installments from your bank account. Choose this date wisely, considering your salary date, and other payment obligations. You will also need to consider the payment mode. The amount can be auto-debited from your account using net banking, NEFT/RTGS, or OTM (one-time mandate).

Decide Your SIP Duration

After that, you decide the duration for which you desire to keep investing. An SIP calculator can help you decide on a duration, taking into account your financial goals, and annual rate of return. After you decide on the duration, and complete all details online submit it. You will receive an acknowledgement through email and SMS. Usually, the SIP is activated within a few days, after proper verification of KYC status.

In order to get most out of your investment, you should stay invested till the end.

Moreover, SIP is a great financial instrument to plan for your financial future. It is also one of the most affordable high-performance investments, allowing you to begin with a mere Rs.100. Apart from convenience and flexibility, it offers other benefits such as avoiding the need to time the market, or keeping risk lower with Rupee cost-averaging.

After you learn about how to start a SIP investment, make sure to understand all the terms and conditions, before you take a decision.

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