The BuyT Desk
The latest data by the Association of Mutual Funds of India (AMFI) tells us that retail investors opened 16.44 lakh new systematic investment plan (SIP) accounts in January 2021. It makes it quite clear that retail investors are keen to invest in mutual funds via SIPs as they offer the convenience of periodic investment of as low an amount as Rs 500 in a month. When Indian markets touched high, many investors booked profit, and there was a massive redemption from mutual funds. But at the same time, we see a record number of new SIP registration too.
The investor has to select a mutual fund of his choice. Then link the MF account with your bank account for automatic monthly transfers into the chosen SIP.
Steps to follow to start online SIP-
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Must have documents- PAN card, an address proof, a passport size photograph and a cheque book.
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Complete your Know your Customer (KYC).
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After completing KYC, you have to select the fund and register yourself with the company on their website or nowadays, most of them have a mobile application that can be downloaded on your phone.
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Check for the ‘Register Now’ link to register a new account.
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You will have to fill out your personal details and contact information in a company’s form.
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You will set up a username and password for transacting online.
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Bank account details will have to be submitted from which the SIP payments will be debited.
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Once you complete the registration process, you will be able to start your purchase.
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It may take 30-35 days to start the SIP.
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You don’t need a big amount to start the investment. A SIP can be started with a minimum of Rs 500 monthly.
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You can stop your SIP at any moment when you face any kind of financial stress. There will be no penalty or fine for discontinuing a SIP.
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You can restart a discontinued SIP investment without any hassle.
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You can always increase or decrease your SIP amount as per your financial convenience.
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They help you in leveraging various market phases. As you make your investment in small measures and periodically, you need not worry about the ups and downs of the market daily. When the market is up, you will be getting a good value on your investment, and when the market is down, you will be adding more units to your portfolio.
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You will earn compounding interest on your investment. You will earn interest on the seed capital or the principal amount. The gains plus your principal amount will be reinvested further and earn interest.
