How to Invest in SIP for Beginners in 7 Simple Steps

by Tanisha Chabra
04 July 20244 min read
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How to Invest in SIPHow to Invest in SIP
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SIP is one of the top ways to start your investment journey with mutual funds. Mutual funds are a popular investment method today that offers long-term investment plans. 

With SIP, you can choose the installment amount and intervals. SIP can be a lower-risk strategy for mutual fund investment, where investors can effortlessly diversify the risk. Explore SIP and how you can invest in it here. 

SIP - An Overview

Most beginners don't have any answers to the question “What is SIP?” or “How to invest in SIP?” It is very important to know all the details about SIP before starting your mutual fund investments. SIP (Systematic Investment Plan) is a part of mutual fund investment that enables you to invest your money in installments that suit your convenience. These could be monthly or quarterly installments. 

For instance, if you have started your investment with Rs. 4000 in a mutual fund plan with SIP, then accordingly Rs. 4000 will be debited from your account every month and contributed to your mutual fund plan. 

Also Read: Difference Between SIP And Mutual Fund

How to Invest Money in SIP: Key Steps

Let's have a closer look at the step-by-step process here for how to invest in SIP online. 

Step 1: Identify Your Goals

You should first identify your financial goals to identify the right mutual fund plan for you. Consider your risk tolerance capacity, future financial plans, tenure, and financial goals as well to start your investment journey.

Step 2: Keep All the Essential Documents 

You must have all your essential documents ready before investing. These documents will be required for the mutual fund investment process. The essential document list includes your ID proof, Aadhar card, PAN card, and Address proof. if you want to verify your PAN Aadhaar linking status or know your PAN number, you can refer to our comprehensive guide.

Step 3: Complete KYC Process 

KYC plays an integral role in mutual fund investment. You need to complete your KYC process before starting a mutual fund investment. It can be completed by filling out KYC forms from different financial institutions. You can also complete it easily online.

Step 4: Choose a Mutual Fund Scheme 

Now, you need to choose a suitable mutual fund plan for your investment. To do so, you need to take into account important factors such as your financial goals, risk capability, and duration.

Step 5:  Registration for SIP 

You complete the SIP registration process after choosing the right mutual fund plan. Register for SIP through an Asset Management Company (AMC) or a broker. You must also submit the SIP amount cheque for the investment you want.

Step 6: Choose a Date for SIP 

You can choose many monthly dates for your mutual fund investment via SIP. Choose a suitable date for your SIP at your convenience, making it easy for you to manage your installments. 

Step 7: Submit Your Form 

After selecting the mutual fund company, it's time to submit your form. You should recheck all the documents and details for accuracy and authenticity. You can easily submit your form online or offline. 

Learn more with our latest guide “Best SIP for Long Term Investment

Key Considerations Before Investing in SIP

1. Financial Objectives

You should take into account your financial goals before you invest in SIP. Identify the reason why you want to invest in SIP and what your financial objectives are. This might be related to your emergency fund, retirement plans, or saving for children's education.

2. Investment Tenure

One also needs to consider the tenure of an investment. Find out how long a period can lead to your financial goals. If you have any doubts about the tenure of the investment, seek specialist advice.

3. Consider Your Risk Appetite

Evaluate your risk capacity before investing in SIPs. Determine how much cash you can afford to lose each month without causing yourself stress. Your income level and financial objective must be considered to analyse your risk-taking capability.

4. Compute Your SIP Returns

Moreover, calculate your SIP return, which will help you know the likely returns from this investment. It will enable one to identify whether the amount one wanted to invest was appropriate for his/her financial objectives or goals. The calculator for calculating SIPs will be helpful.

Bottom Line

A systematic investment plan (SIP) is one of the most cost-effective investment strategies for achieving financial goals. You can invest in a mutual funds scheme with SIP in quarterly or yearly installments. It offers a convenient way of investing money in a mutual fund, leading to a secure future. Learn how to invest in SIP in India and consider all the tips to invest in SIP in completing your investment process for mutual funds without any problem.

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