How To Invest In SIPs: A Step-by-Step Guide For Beginners

An SIP or Systematic Investment Plan is a simple investment method that allows you to invest a fixed sum of money in a mutual fund scheme at pre-decided intervals (weekly, monthly, or quarterly). SIPs help you build wealth over time with regular investments, compounding returns, and rupee-cost averaging. If you are a beginner seeking to start your mutual fund journey with SIPs, you must first understand how to invest in SIPs. This article offers a quick guide on the steps to invest in SIPs and grow your wealth over time.

Here’s a step-by-step guide on how to invest in SIPs in India:
 

Step 1: Keep documents ready

Before you start investing in mutual funds with SIPs, you need to keep certain documents ready. While the document list is short, it is still prudent to keep these papers handy before you initiate the SIP process. Here’s a list of essential documents you need to start SIPs:

• ID proof: Valid ID proof documents include Aadhaar Card, PAN Card, Passport.

• Address proof: Valid address proof documents include Aadhaar Card for Indian Address Proof and passport for NRI.

• PAN Card
   

Step 2: Get your KYC done

To invest in a mutual fund via SIPs, you need to be KYC-compliant according to the government mandated regulations. Therefore, the next step on how to invest in SIP includes completing the KYC process. To do so, you must fill out a KYC application form at any authorised AMC or RTAs like CAMS or KFintech which are authorized by SEBI. You should note that even if you have completed KYC proceeding for your regular bank account, first-time investors in MFs need fresh C-KYC when investing online. You will find the C-KYC option available on the investment platform. C-KYC proceedings are pretty straightforward. You simply need to upload scanned copies of your KYC documents and verify with a selfie to get started.
 

Step 3: Register for an SIP

The next step to invest in SIP involves getting registered. To do so, you must choose a broker or SEBI-registered financial advisor of your preference and get registered with them. Every intermediary has their own user registration process which is generally simple and straightforward. Once registered, you can browse through various investment options. However, if you’re investing in mutual funds directly through the AMC (direct plans), you do not need to register with a distributor/agent.
 

Step 4: Choose the right mutual fund

This is arguably one of the most important steps our guide on how to invest in SIP. Consider your investment goals, risk appetite, and time horizon to find plans that best align with your requirements. Remember, failing to choose the right plan can compromise the returns from your investment.
 

Step 5: Select your contribution amount

While you can start SIP investments for as little as Rs.500, you may wish to invest more to watch your corpus grow at a faster pace. Therefore, you need to decide how much you want to invest in the selected mutual fund scheme through SIP. Consider your income, expenses, and savings to determine how much you can comfortably contribute to the investment without straining your finances. Additionally, you must choose the frequency of investment from the available options, namely, weekly, monthly, or quarterly.
 

Step 6: Choose the SIP date

Next, choose a convenient debit date for your investment. This means selecting when you wish the SIP amount to be debited from your bank account. Typically, experts recommend scheduling SIP dates at the beginning of the month, right after your salary gets credited. This helps ensure that the investment is prioritised over impulsive spending. However, you can set SIP dates according to your cash flow convenience.
 

Note: Once you set the date, you can initiate an auto-debit mandate for the same. You can submit an ADF offline at the bank branch or sign-up for an e-NACH mandate online.
 

Step 7: Submit the form

The last step on how to invest in SIP entails filing your SIP form. You can conveniently submit the SIP form online or make an offline submission.

Now that you know how to invest in SIPs, you might rush to start your investment journey. Before you do that, remember to consider the following factors:
 

Consider your financial goals

Start by setting a clear financial goal for the SIP. Your financial goal can be anything from a short-term objective like planning a vacation to a long-term one like planning for retirement. Having clear goals offers purpose and long-term perspective to your investments, making it easier to select funds.
 

Review your risk appetite

Understand your risk profile thoroughly before you start investing in MFs through SIPs. Mutual fund SIPs offer good investment options for both conservative and aggressive investors. You simply need to find the right mutual funds that align with your risk-return profile.
 

Evaluate your investment horizon

Consider for how long you wish to remain invested. Your investment approach will depend on your time horizon. For instance, if you are investing for retirement which is 10 years away, you can afford to be aggressive with your investments. However, if retirement is just 5 years away, it’s best to switch to debt options to preserve your gains. Generally, longer horizons offer better returns, especially in the context of equity funds.
 

Estimate returns

Next, calculate the returns you stand to make from the investment. Input the SIP amount, frequency, return rate, and investment duration fields into a mutual fund calculator tool to estimate your mutual fund corpus. You can run multiple combinations on the calculator to reach your target amount within your time horizon. Leveraging the free calculator tool helps you estimate your wealth growth over time to fine-tune your investment plan accordingly.

SIPs offer an easy and hassle-free way of investing in mutual funds with regular contributions. This investment mode helps cultivate a disciplined investment approach to simplify the long-term wealth-creation journey. Learning how to invest in SIP can help beginners ease into this straight-forward process and reap its benefits.

Starting an SIP is just a few clicks away on the Bajaj Finserv Mutual Fund Platform. This simple and intuitive platform lets you sign-up with a simple KYC process and start SIPs with as little as Rs. 100. Additionally, you get to compare 1000+ mutual funds and review their past performance to curate a diversified portfolio of SIP investments!

• Investors need to keep KYC documents handy and complete C-KYC proceedings before investing in SIPs.

• Investors are required to register with a distributors/agents before starting SIPs.

• Selecting the SIP amount and debit date are crucial steps in starting an SIP.