A mutual fund is a type of investment where your fund is invested and managed by a professional fund manager. There are two ways you can invest in mutual funds: either lump sum or systematic investment plan (SIP).
A rising weapon for financial independence is the systematic investment plan (SIP), which enables you to build wealth over time by gradually investing small amounts of money each month in mutual funds. Rupee cost averaging and the power of compounding are the two most crucial investment methods that SIP allows you to leverage. Additionally, SIP helps in the development of a disciplined investing strategy.
Explore this article ahead if you are willing to invest in SIP through SIP apps.
Understanding SIP
The Systematic Investment Plan (SIP) is an organised approach to making investments. With its many benefits, it enables investors to accumulate money by consistently making fixed-sum investments at predefined intervals. Quarterly, monthly, or weekly periods are possible. To automate withdrawals from their bank accounts for investments in the chosen scheme, investors can also choose auto-debit.
SIPs give investors a versatile way to make investments. Depending on their financial situation, they might change the amount they invest. This flexibility allows investors to adjust their SIP amount as needed.
Steps to Invest in SIP Through App
Investing in SIPs is simple, thanks to the SIP apps. The SIP app helps to start a SIP without any hassle. The following simple steps will help you begin investing in SIPs in India:
Step 1: Prepare All Required Documents
Before investing, be sure you have all the required paperwork ready. It is advised that you begin by having all necessary records available, including:
- Proof of Identity
- Proof of Address
- A PAN Card
Make sure your bank account information and account number are accurate as well. You will also need a copy of your driver’s license or passport. Make sure your investments match the most recent KYC guidelines established by the government if you intend to make investments aside from cash.
Step 2: Complete Your KYC
Following the government-established KYC guidelines is essential before investing in any financial product. To accomplish this, you must complete an application at any authorised bank or post office in India where pre-paid cards are issued.
If you don’t want to visit a bank branch in person or if there isn’t one close to where you live, you can also apply online. Personal information including name, address, and a photo ID (passport or driver’s license) is required on the application form.
Step 3: Register For A SIP
To begin investing in a Systematic Investment Plan (SIP), you must first register with an Indian financial advisor or broker. After registering, a variety of investment plans are available for you to select from based on your needs and risk tolerance.
Step 4: Select A Plan
The most important step is this one. Choosing the wrong plan will make it difficult to earn a fair return on your investment. Every plan is unique and comes with different features and advantages.
Step 5: Decide How Much You Want To Invest
Decide how much you wish to invest in the plan. Selecting the amount of money you want to put into investments each week or each month is crucial. This will depend on how frequently you need money.
Step 6: Select A Date That Works Best For You
Choose a date that works best for you. Within a given month, there are many dates available for different SIPs.
Step 7: Send In Your Application
Start the SIP by filling out the paperwork online after selecting the mutual fund provider (depending on your fund house). If you have an online Demat account, you can submit your SIP online.
Conclusion
Using a Systematic Investment Plan is an innovative and convenient way to invest in mutual funds. It allows for regular monthly or quarterly investments of a fixed amount. This method of investing makes the process of building wealth easier for the individual by ensuring discipline and consistent investments in the top mutual funds. Compared to lump-sum investment, it is a better approach to accumulate wealth since it lowers the risk of stock market volatility. A dependable SIP app like Tata Capital and SIP calculator helps you comprehend the future of the investment you make.
