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How to Start SIP with Easy Investment Options

A SIP or Systematic Investment Plan is an investment plan where you invest a fixed amount in a mutual fund on a pre-decided date. Payments can be made monthly, weekly or quarterly depending on the scheme and platform. This approach can ease the Investment planning by breaking one big task to smaller and regular tasks.

A SIP does not eliminate market risk or guarantee profits. The idea is to create a savings discipline. Each payment buys you units in the mutual fund at the net asset value on the valid date (the NAV).

What’s a SIP?

SIP is not an asset in itself. This is a way to invest in a mutual fund. The fund may invest in shares, bonds, money market instruments or a combination thereof. Results differ by fund type, cost, risk and holding term.

The first step to How to Start SIP is to link the plan to a specific goal if you are a reader looking for. A goal could be an emergency fund, cost of study, home deposit or retirement.  The objective helps to decide on the sum, term and type of fund.

Step 1 – Define the Goal and Time

Write down your goal amount and your deadline. Short term goals may require a lower risk fund but long term goals may be able to take on equity risk. Don’t use money you need to pay rent, bills, debts or immediate needs.

Step 2: Choose a monthly amount

Think about income, fixed expenses, debt and cash reserve. Choose a SIP amount that is affordable for you to pay every month. The plan must not jeopardise basic needs. You can start out small, and edit later. Some schemes permit low sum SIPs but the limit may vary.

Step 3: Complete your KYC

In India, Investment in Mutual funds is Mandatory for KYC. Keep your PAN, identity proof, address proof, bank details and phone number handy. The check could be Aadhaar steps or video proof, depending on the platform and rules.

Step 4. Choose an investment

Choose a type of fund that is aligned with the goal and risk tolerance.

  • Equity funds invest largely in stocks. They can be good for long term goals, but can also have sharp price movements.
  • Debt funds invest in bonds and money market instruments .  Their risk can vary by credit rating and term.
  • Hybrid Funds are a mix of equity and debt in one plan. The mix differs from scheme to scheme.
  • Index funds track a particular market index. Their worth is that index, minus fund expenses.
  • Liquid funds invest in brief term debt instruments. They may be good for cash goals but they are not risk free.

Read scheme paper. Review the goal, asset mix, risk label, expense ratio, exit load and tax rules. Past performance is not indicative of future results.

Step 5: Select the SIP Date

Choose a date soon after you receive your pay cheque. This helps to keep enough cash in the bank. Don’t pick a date near big bill payments. You can break the sum over dates but it is easier to follow a single clear date:

Step 6: Activate auto-debit

Log in to the fund house or to an investment platform. Choose Scheme SIP Amount Date Tenure Add bank mandate for automatic debit. Review data before approving it. Maintain sufficient balance in linked account on each due date.

Step 7: Review, Don’t React

Check the SIP once or twice a year. Review cost, risk, fund plan. A brief market dip by itself might not justify a change. The review can be needed when the objective changes, the fund changes the plan stated or the SIP amount is no longer suitable to the budget.

Where does Bajaj Broking stand?

Mutual Funds Investment at Bajaj Broking App & Website. On its website, it claims that investors can view more than 4,000 schemes and start SIPs in some plans at Rs 100. It also has a SIP calculator to check the monthly amount, term and assumed rate before Investment is done. These tools can help plan goals, review schemes and track portfolio in a single account.

Mistakes to avoid

Don’t select a scheme just on the basis of its past returns. You don’t want to copy someone else’s investment strategy. Don’t roll out too many SIPs without a clear role of each SIP.  Also, do not skip any payments due to bad planning of your bank balance.

Conclusion

How to start SIP? – The basic steps of SIP start are goal, good budget, KYC and good mutual fund. Choose the fund type well. Fix auto-debit and always review plan from time to time. The conclusion is still tied to market risk and fund selection, but a simple investment routine can help you keep saving regularly.

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