Want To Invest In Sips? Here Is A 5-step Guide

By Author: swarali chavan
Total Articles: 7
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Mutual funds investment is of two kinds – lumpsum or Systematic Investment Plan (SIP). Lumpsum investment requires high-risk appetite. Precisely why people prefer SIP investments. It allows you to invest periodically – daily, weekly, monthly, quarterly, half-yearly, yearly – into a selected mutual fund scheme.

SIPs also enable you to track your portfolio time to time and inculcates saving habit. The returns are steady but fruitful in the long run. One of the crucial steps in SIPs is careful fund allocation. The fund manager generally takes decisions on investment. SIPs allow you to maintain a diverse portfolio. So, you can have a combination of large-cap, small and mid-cap funds, and multi-cap funds.

But how to start SIP investment? It includes five easy steps:

1) Risk-appetite and objective: Understand your risk tolerance. Higher the age and financial obligations, lower the risk levels. After you have identified your risk levels, understand your goal. You could invest to fulfil short-term as well as long-term goals like a child’s education, marriage, purchase a vehicle, vacation, ...
... retirement, etc. This is the first step towards the question how to start SIP investment.

2) Mutual fund schemes: Now that you are aware of the goal and risk tolerance, choose from the various mutual fund scheme available in the market. They must fall within the framework of your requirement. You have to take into account the funds history when selecting a scheme. Follow the steps and begin your SIP investment offline/online:

• Fill the application form that the fund house provides. How to invest in SIP online? Fill the ECS form on the website
• Submit the SIP amount cheque or select the payment mode and make the payment
• Upload the essential KYC documents

3) Date of SIP: Depending on the selected interval, the amount gets auto-debited from your savings account. However, you have the choice to pick multiple SIP instalment per month.

4) Duration of SIP: This kind of investment is the best and convenient mode to fulfil your financial goals. You can calculate the SIP amount using the goal planning calculator available on third-party websites. You also are well-informed of the duration of the investment.

5) Investment period: If you wish to create long-term wealth, SIPs are the best when invested for longer period. You do not have to check the prices daily and not even time the market. So, you stay worry-free until the end of the investment period.

So, if any of the budding investors enquires about how to start SIP investment, suggest them the mentioned tips.