How to invest in a SIP?


One of the best ways to invest with very little money in one go is to start a Systematic Investment Plan (SIP). You can regularly contribute to your SIP and choose to invest in a wide variety of mutual funds, from debt to equity and gold to commodities. Whatever be your choice of asset, you can earn a handsome return by regularly contributing to a SIP. Here’s how you start:

Choosing your SIP type and goal – Given the range of choices that you can base your SIP upon, it is important to assess how much risk you are willing to take and what you expect from your returns. People may invest in aggressive options early in their life because they have a longer time to recover from losses, if any. At a later age, people invest in safer debt mutual funds to keep their risk exposure limited. If you have a specific financial goal that you plan to achieve, you can choose your SIP tenure accordingly, so that it matures in time for you to meet your financial goals.

Choosing the scheme – The two most important things that make your SIP a success are a long-term investment and the right fund scheme. Choosing the right fund can never be a fool-proof task, but you can look at the recent performance of the shortlisted SIP schemes to find out which one is doing better than the others. The performance should be consistent, and the CAGR shouldn’t be boosted by one year’s outstanding success with several years of mediocrity. Factors like the track record of the fund manager, risk-return attributes, and duration of the scheme are important in assessing the schemes. The diversification and liquidity of the underlying investment of mutual funds also give an insight into the quality of the scheme.

Follow the proper SIP opening process – Opening a SIP investment would involve the filling up and submission of the application form, along with supporting documents. The various documents that you might need to furnish while opening a SIP include a PAN card, Aadhaar, checkbook and your photograph, along with other KYC documents.

You can make the monthly SIP payment either online or offline. For offline payment, you will have to deposit the cheque for the SIP contribution amount. If you prefer mutual funds online and want an auto-debit for the contribution, you will have to fill the ECS mandate form.

You will also have to select the date of payment for the SIP. The monthly SIP amount will be debited from your bank account on the date that you selected as per your convenience. You will also have to select the tenure of the SIP contribution and the mandate end date.

Tata Capital Moneyfy app have proven to be a preferred place for investors to start their SIP journey online. Pick the right one today to grow your wealth one investment at a time.