Investing in mutual funds? Here is how to start a SIP
Mutual Funds have emerged as one of the most popular investment options in the recent times due to higher returns. However, since the mutual funds also invest into equities, experts suggest to opt for SIPs than lumpsum investments.
Mutual Funds have emerged as one of the most popular investment options in the recent times due to higher returns. However, since the mutual funds also invest into equities, experts suggest to opt for SIPs than lumpsum investments. Systematic Investment Plan or SIPs allow you to invest regularly a fixed sum in mutual fund schemes. A SIP works like RDs where a fixed amount is deducted from your savings account every month and directed towards the mutual fund you choose to invest in. For the common investor, this can be the source of good returns and the perfect preparation for a financially secure retirement or even to save the money for big ticket investments like buying a car or a house.
How to start a SIP?
- You need documents to start the investment. These include – a PAN card, an address proof, passport size photograph and a cheque book.
- Provide information like name, DOB, mobile number and address to complete your Know your Customer (KYC) process.
- After completing the KYC, go to the investment platform or fund house website where you want to invest the money.
- Create an account by entering details like username and password.
- Select the mutual fund you want to invest in with the amount you want to put in.
- Setup a debit process and start the SIP.
Benefits of starting a SIP
You can start a SIP of different frequency - weekly. monthly, quarterly, among others. It allows you to average the purchase, deal with the ups and downs of the market and maximise returns. A SIP can be started for as low as Rs 500 and since the amount is deducted automatically every month, it is one of the convenient investment options too.
With a SIP, you get the power of compounding that maximises returns. The compound interest ensures better long-term benefits compared to one time investment. Also, if you opt for ELSS funds, you can get income tax benefits as well.
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