How to Invest in SIP Online for Beginners

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A SIP or Systematic Investment Plan lets you invest a fixed sum in a Mutual Fund on fixed dates. You can pay the money in any month, quarter or other gap you like. SIP Online simplifies this process by providing setup, payment and tracking through a website or app.

For a new investor, SIP helps develop an investing habit by not requiring to pay a large sum at one go. It also spreads the purchases throughout different levels of the market. But the returns are tied to the market. They are not static nor guaranteed. So clear objective, right fund type and regular reviews are important.

Step 1: Set a Goal

First, make a decision about what you want to do with your investment. Perhaps you are saving for a home down payment, education, travel or retirement. Set a target amount and timeline.

If you have a short time horizon, you might prefer a low risk option. Some equity exposure may be permitted via a long goal. “Don’t pick a fund because it has done well in the recent past. Match the scheme to your ability and goal to tolerate market volatility.

Step 2: Determine Monthly SIP Amount

Check your income, expenses, debt payments and emergency savings. Choose an amount that you can pay on time, every month. This can be increased in future with the increase in income

For example, for a long-term goal, one can start with Rs 1,000 a month. The money should not be used to pay for rent, food, insurance or any other urgent needs. An online SIP calculator can show you an estimate on the basis of assumed return, sum and period. This is just a demonstration, not a promise.

Step 3: Verify Your KYC

KYC is mandatory for investment in Mutual Funds. Keep your PAN, Aadhaar, bank proof, mobile number, email address and photo handy. The platform may require identity checks, electronic signature or video KYC.

Fill in all particulars as per your records. If it doesn’t match it can hold up approval or payment setup

Step 4: Choose a Reputable Online Venue

You can start SIP Online through an asset management company, registered distributor or investment platform. Look for the platform’s registration, security process, fee details, service terms and support options.

Bajaj Broking is one such platform to look out for this. The application and web platform provides access to Mutual Fund schemes, SIP setup, portfolio tracking and a SIP calculator. These tools can help a beginner to plan an amount, and keep a track of active investments at one place.

Step 5: Research the Fund Prior to Investing

Read scheme information document & factsheet. Check fund goal, asset mix, risk level, benchmark, expense ratio, exit load and track record. Mutual funds may invest in stocks, bonds, government securities or money market instruments. Past performance does not guarantee future results.

Also note whether the plan is direct or regular.  No distributor commission in direct plan. Distributor service and cost is included in a regular plan. Choose your route based on the assistance you require.

  1. Starting the SIP

Choose scheme, amount per month, SIP date and investment period. Link your bank account and give your mandate for auto debit.Please verify the details before submitting the request.

Maintain sufficient balance in the bank account before each SIP date. This failed debit might mean a missed payment or a charge from your bank. Save the confirmation and check the first unit allocation.

Step 7: Follow-up and review

A SIP does not protect you from market risk. Review the fund periodically, maybe once or twice a year. If it still (fits your goal, time frame and risk tolerance).

Don’t stop a SIP for a small dip in the market. At the same time, don’t ignore changes in the fund’s goal, process, cost or long-term record. If you need any assistance, please approach a SEBI registered investment adviser.

Common Mistakes to Avoid

  • Don’t invest money you’ve borrowed – or skip building an emergency fund
  • Just choose one from the same type of fund to avoid duplication
  • Read scheme papers
  • Follow social media tips
  • Once set up, see nominee details, bank data and contact details
  • Keep bank statements and payment records in a safe place

Conclusion

SIP Online investment: Choose a goal, choose an affordable amount, do KYC, study the scheme and enable auto-debit. Choose a good platform and check the plan from time to time. A Mutual Fund SIP is an investment made through regular payments but the value goes up or down with the market. Please read all scheme related documents carefully before investing.

Sources

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