How to invest in SIP online
Step 1: Visit the Bajaj Finserv website or download the app from Google Play Store or App Store
Step 2: Navigate to 'Investments' and click on 'All Investments' on the home page
Step 3: Click on 'Mutual Funds' icon
Step 4: Click on 'Explore Funds'. You will be redirected to the mutual funds listing page
Step 5: Filter by scheme type, risk appetite, returns, etc. or choose from the top performing funds list
Step 6: All the mutual funds of the particular category will be listed, along with the minimum investment amount, annualised return, and rating
Step 7: Click on 'Invest Now'
Step 8: Enter your mobile number and sign in using the OTP
Step 9: Verify your details using your PAN, date of birth. If your KYC is not complete, then you will have to upload your address proof and record a video
Step 10: Enter your bank account details
Step 11: Upload your signature and provide some additional details to continue
Step 12: Choose and select the mutual fund that you want to invest in
Step 13: Choose whether you want to invest as SIP or lumpsum and enter the investment amount. Click on ‘Invest Now’
Step 14: Select your payment mode i.e., net banking, UPI, NEFT/ RTGS
Step 15: Once your payment is done, the investment will be complete
Your investment will start reflecting in your portfolio within 2-3 working days.
Features of SIP Investment
SIP, or Systematic Investment Plan, offers several distinct features:
- Regular Investment: SIP allows you to invest a fixed amount of money at regular intervals, typically monthly. This promotes discipline and helps you build wealth over time.
- Affordable: You can start SIP investments with a relatively small amount, making it accessible to a wide range of investors.
- Rupee Cost Averaging: SIP spreads your investment over time, so you buy more units when prices are low and fewer when they're high, potentially reducing the impact of market volatility.
- Flexibility: You can choose the SIP amount, investment frequency, and the mutual fund scheme that aligns with your financial goals and risk tolerance.
Benefits of investing in mutual funds via SIP
Here are some benefits on investing in mutual funds via SIP
- Rupee Cost Averaging: SIP allows you to buy more units when prices are low and fewer when they're high, reducing the risk of making poor investment decisions based on market fluctuations.
- Disciplined Saving: SIP instills financial discipline by ensuring you invest regularly, regardless of market conditions.
- Compounding Benefits: Over time, SIP investments benefit from the power of compounding as returns on your investments generate additional returns.
- Accessibility: SIP is accessible to both new and experienced investors and accommodates a wide range of budgets.
- Professional Management: Mutual funds are managed by professional fund managers who make investment decisions on your behalf, based on their expertise and research.
- Diversification: Investing in mutual funds through SIP provides diversification as your money is spread across a portfolio of assets, reducing the risk associated with individual stocks or bonds.
- Convenience: The automatic deduction of SIP amounts from your bank account makes it a hassle-free investment option.
Tips to invest in SIP?
Here are some tips to invest in SIP:
- Define Financial Goals: Clearly outline your financial goals and the purpose of your SIP investments, whether it is wealth creation, education planning, or retirement.
- Understand Risk Tolerance: Assess your risk tolerance to align your SIP portfolio with your comfort level, choosing funds that match your risk appetite.
- Diversify Your Portfolio: Opt for diversification by investing in SIPs across different mutual funds and asset classes to spread risk and enhance potential returns.
- Select Suitable Tenure: Choose SIP tenures that match your investment horizon, ensuring your funds align with short-term or long-term financial objectives.
- Regularly Review and Adjust: Periodically review your SIP portfolio to ensure it aligns with your goals, and consider adjustments based on changing financial circumstances or market conditions.
Read more: What is portfolio diversification.
Lump Sum Vs SIP: Which plan Is better?
The choice between Lump Sum and Systematic Investment Plan (SIP) depends on individual financial goals, risk tolerance, and circumstances. Lump Sum involves investing a significant amount all at once, suitable for those with surplus funds or specific investment opportunities. SIP, on the other hand, promotes disciplined, periodic investments, ideal for risk-averse investors or those looking to mitigate market volatility through rupee cost averaging. SIPs are conducive for long-term wealth creation and goal-based savings, while Lump Sum may offer more immediate returns but entails higher risk. Ultimately, the better plan depends on one's financial objectives, investment horizon, and risk appetite. Diversifying between both strategies is also a viable approach.
How much you should invest in SIP
Here are a few details about how much should you invest in SIP:
- There is no limit to the amount you can invest in a SIP. The minimum amount that you can invest can be as low as Rs. 100 per month.
- The ideal amount to invest in an SIP will differ from investor to investor, depending upon a number of factors such as their financial goals, investment horizon, and risk appetite.
- You can use an SIP calculator to estimate the potential future value of your monthly investments. To use this functionality, you need to provide 3 key inputs: the amount you want to invest, the number of years for which you want to stay invested, and the expected rate of return.
Things to consider before investing in SIP
- Financial Goals: Clearly define your financial objectives, whether it's wealth creation, education, retirement planning, or buying a home. Align your SIP investments with these goals.
- Risk Tolerance: Assess your risk tolerance and choose SIPs that match your comfort level with market fluctuations. Conservative investors may opt for debt funds, while those comfortable with risk may choose equity funds.
- Investment Horizon: Determine your investment horizon, considering the time you can commit to staying invested. Longer investment periods often align well with equity funds, while shorter periods may suit debt funds.
- Expense Ratio: Evaluate the expense ratio of the SIP, which includes management fees and operational costs. Lower expense ratios contribute to more efficient returns.
- Fund Performance: Analyse the historical performance of the mutual fund, comparing it with benchmark indices and peers. Consistent and robust performance over time is indicative of a well-managed fund.
- Fund Manager Expertise: Consider the expertise and track record of the fund manager. A skilled manager can significantly impact the fund's performance.
- Exit Load: Be aware of the exit load, a fee charged for premature withdrawals. Understanding the exit load structure is crucial for managing liquidity needs.
- Diversification: Diversify your SIP portfolio across different asset classes and fund categories to spread risk and enhance potential returns.
- Market Conditions: Stay informed about prevailing market conditions. Periodically review and adjust your SIP strategy based on economic trends and financial goals.
- Systematic Investment Amount: Determine an affordable and consistent SIP amount based on your financial capacity. Regular contributions, even if modest, can accumulate to significant wealth over time.
Read more: How to evaluate mutual fund performance.
Conclusion
Embarking on the journey of investing in a Systematic Investment Plan (SIP) can be a transformative step toward financial well-being. This step-by-step guide has illuminated the path, emphasising the importance of aligning investments with clear financial goals, understanding risk tolerance, and maintaining discipline in contributions.
Crucially, the magic of SIPs lies in their long-term perspective, harnessing the power of compounding and rupee cost averaging. As investors commit to regular contributions and navigate market fluctuations with prudence, SIPs become a reliable vehicle for wealth creation.
Remember, the journey doesn't end with the initial investment. Periodic reviews, adjustments, and staying informed about market trends contribute to a robust SIP strategy. Whether it is securing a child's education, buying a home, or building a retirement nest egg, SIPs, when approached thoughtfully, stand as a steadfast companion in realising financial aspirations. In essence, this guide underscores that investing in SIPs isn't just about allocating funds; it is about sculpting a financial future with foresight and discipline.
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