Points you should know before doing an SIP

Systematic Investment Plan is commonly referred as SIP. It is the best way to invest in mutual fund. By investing SIP you can invest for your future. You can do a SIP on daily/ weekly/monthly/ quarterly/ semi-annually basis. By doing a SIP you can make a financial discipline in your life. SIP is also a flexible investment plan.

Investing in Mutual Fund is categorized on the basis of- Purpose of the investment, Nature of the schemes, Formation of the schemes.

To invest in mutual fund, there should be specification in defining the investment objective which can be- purchasing a house, education of children, wedding, treatment etc. If there is no specific objective, at least one should have a clear idea of how much wealth to acquire and in how much time.

Determining an investment objective helps the investor zero in on the investment choices based on payment method, level of risk, lock-in period, etc.

When you’re investing in SIP you should know its categorization –

There are five types of SIP-

Step Up or Top Up SIP
Flex SIP
Trigger SIP
Perpetual SIP
Pause SIP

How to start a SIP?

First, you have to set what your investment goal is.
Second, you must set tenure which means how long you want do that investment.
Third, you must decided how much amount you need to invest to complete your goal.
Now you have to choose the right AMC with the help of your financial advisor.

Documents you require for SIP

Pan Card
Adhaar Card
Voter’s ID
Passport Size Photo
The investors will be issued an acknowledgement receipt which he/she needs to submit while applying for subscribing for a mutual fund scheme.

Eligibility for investing on SIP Mutual Fund:

Adult citizens residing in India.
Minor through legal guardians/parents.
Limited liability partnership.
Religious and charitable trusts.
Banking and financial institutions
Mutual Funds or Alternative Investment Funds which have registrations under the Securities and Exchange Board of India
The Karta of Hindu Undivided Family (HUF)
Persons of Indian origin residing abroad (PIOs) or Non-Resident Indians can apply for subscription either on repatriation basis or on non-repatriation basis (permitted under Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000)
Foreign Institutional Investors (FIIs) who have registration under the Securities and Exchange Board of India on repatriation basis (permitted under Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000)
Mutual Funds or Alternative Investment Funds which have registrations under the Securities and Exchange Board of India
Other schemes of Mutual Funds subject to the conditions and limits prescribed by SEBI Regulations.

Benefits of Online Mutual Fund SIP Investment:-

It helps in routine investment without giving time to the market.
The investment options are very flexible and affordable too.
You don’t need to take pressure about market’s ups and downs.
There is no entry charge or exit charge in SIP investment.
SIP earns nice return even when the market is down.
It helps in averaging the purchase costs of the units of mutual funds.
Diversified portfolio and asset allocation helps in managing risks.
It gives less pressure on the wallet.
It makes the investment convenience for the investor.

Points you should remember

Never skip your SIP.
Stay calm, patience and long to get a huge return.
Start from your first salary to get a bigger return. Starting it early really helps.