May 29, 2019 / 9:00AM / Policybazaar.com
Starting your investing into SIP investment plans is a really easy process. Putting money into SIP investment plan proves beneficial as it allows for long - term investment options which helps accrue a huge sum of money over a period of time that the investor chooses.
SIP investment plans are plans that work in a systematic approach in order to create a sum of money through investing money into mutual funds. It is a way to save money through investments will bring good returns.
The Systematic Investment Plan is a plan that will allow an individual to invest their money into SIP mutual funds in order to accrue a large sum through a long period of time as these plans work best when money is invested into them on a long - term basis.
If the investor wants to collect a good sum of money by the end of the SIP term, then it has to be long term so that the entire benefits can be reaped. But, this plan has great flexibility in terms of the period as the investor has control over when they want to end their SIP plan.
The funds that are going to be invested into SIP investment plans are predetermined. Even the periods that you have to invest again are chosen earlier out of weekly, monthly or quarterly. The investor has the liberty of being able to choose the payment mode in accordance with their convenience and ease. The deposit is supposed to be made at regular intervals till the time the investor chooses to end the term.
Once you start investing into the SIP investment plans, there is an option that the total amount of your investment money that you need to pay for that particular month or year can be automatically debited from your bank account and be invested into the SIP investment plans if you register your bank account to do so. This will eliminate the risk of non - payments. This money will be invested in the mutual fund schemes that are chosen by the investor. SIP investment plans are super easy when they come to the payments as there is no risk of the lapse of the policy.
How to start?
• To start investing in SIP investment plans, you need to first be registered with a KYC website. KYC stands for Know Your Customer. The potential investor needs to register as a KYC complaint for the purpose of the details and information obtainment by the fund company your money will be invested into. The fund company will verify and get all the details of the investor.
To get KYC registered, the investor needs to fill certain details onto a KYC website. The details that they require are as follows:
✓ Investor’s photograph in passport size
✓ Address proof
✓ PAN - permanent account number card
✓ Identity Proof of the investor
• After you are a registered KYC complaint, the next step that you need to do is to find your fund. The investor has to find out which mutual fund they want to invest their money into to start the SIP investment plans. The investor has to carefully choose a fund which they can invest into in accordance with their level of risk or risk appetite so that even if the mutual funds do not give any returns, the losses are not larger than what they can afford. You do not want to incur heavy losses, do you!
• Now, as an investor, you have to make the decision of how you want to invest your money into the SIP investment plans. The money can be either invested into asset management companies directly or it can be invested through intermediaries.
• After that, the investor has to make a choice about which type of fund they would out their money into like equity, balanced, debt, etc.
• The next step is that the investor has to decide the amount of money they want to be investing into the SIP investment plans. For this, the investor needs to know the purpose of investment. Then, you need to figure out how much money it will take to fulfil that purpose. Then, the thing to find out is how much monthly or yearly investment will help you to reach the amount you want to accrue in a period of time. So, your financial goal will help you determine your financial investment.
• Making a decision about the payment periods is the next step the investor has to follow. The money can be invested into the SIP investment plans monthly, quarter - yearly or yearly, which is up to the investor to decide.
• After that, as an investor, you have to choose the method of paying for the SIP investment plans that you will be investment into. The two modes of payments for the investments are as follows:
✓ Auto - debit: You can register your bank account, out of which the money for the investment will automatically auto - debited from your account during every payment period and put into the mutual funds. You need not worry about the due date for payments.
✓ Manual payments: Pay the money yourself, but if you forget to, turn to auto – debiting the next time.
• We have reached the last step in starting to invest for SIP investment plans. The asset management company - AMC is the institute you need to submit your SIP form to. But, in case you have invested the money through any investment service provider, the submission of the form will be done on behalf of you. There is also a due date for all the submissions; it is advisable to keep tabs on that.
After all these steps have been followed, your SIP investments can begin!