The full form of SIP is the Systematic Investment Plan. After knowing its full form, you would have understood a little about the methods of this investment. Investing systematically.
SIP is a smart method of investing money in mutual funds. In this method, you keep investing a fixed amount at fixed intervals of time. Like investing five thousand rupees on the 5th of every month. However, apart from monthly, this plan also provides the facility to invest weekly, daily, and quarterly. But we all get a salary every month, hence monthly SIP is higher.
So SIP is a wise way to invest money in mutual funds because it inculcates the habit of saving and a big fund can be created very easily.
What is SIP investment
Any investor can invest in the stock market, mutual funds, and gold ETF through SIP, the investment interval can be kept daily, per week, and per month, this is an easy investment solution for working people. By saving some of your salary every month, big investments can be made in a regular and disciplined manner, SIP can be started by giving advance checks in any mutual fund or by giving online instructions, SIP can be done even with a small amount like Rs 500 per month. May go.
SIP provides the facility to invest a fixed amount in the mutual fund scheme of your choice, if you want, you can also invest every week through SIP.
How to invest in SIP
To start SIP, you should have some important documents, like a PAN card, address proof (Aadhar card or Voter ID), passport-size photograph, and checkbook, checkbook because it also contains information about your account number, etc.
Know Your Customer (KYC) is mandatory to start investing in mutual funds, in KYC you will have to provide important information like your name, date of birth, mobile number, address, etc. You have to give this information only once if you want. -You can complete the KYC process online through KYC. When your KYC process is completed, go to the website of the fund house in whose scheme you want to invest, then search Register Now or go to the link of New Investor, in you will find a single form that contains basic information. Will have to be filled.
After this, you can start investing online after setting the user name and password, in this you will also be asked for bank account information, apart from this you will also have to tell how much you want to invest every month, you can choose SIP as per your convenience. You can also choose the date of installment.
Benefits of SIP
SIP is a very good method of investment, the benefits of SIP are as follows - A small amount of money is also invested in SIP.
1. SIP is a simple way of saving.
2. Withdrawal of money from SIP is easy.
3. SIP is a safe and systematic investment.
4. There is less risk in investing in SIP.
5. Tax exemption is available on withdrawal of amount from SIP.
6. SIP is a convenient investment.
SIP is a great way to invest money in Mutual Funds. In this, a fixed amount has to be deposited within a fixed period. For example, if you can save five hundred rupees every month, then this amount has to be deposited on the due date of every month. Most of the people are employed and get a salary every month. That is why most SIPs are monthly only. For those who do not have stock market knowledge, SIP is a wise way because it inculcates the habit of saving and a big fund can be created very easily.
1. Start with a small investment
This is the biggest feature of SIP. Due to this feature, SIP is becoming very popular among middle-class families, especially among parents and students. You can also start SIP with Rs 500. Even a very small investment in SIP gives a big return. If you deposit Rs 1000 every month for fifteen years at 10 percent annual interest, then you get approximately Rs 4 lakh in 15 years. Whereas for this only Rs 15*12*1000 = Rs 1,80,000 have to be deposited.
2. Better option to save
Saving in this era of inflation is a very difficult task. Especially if you live in a metro city or outside your home, this is a very difficult task. But, it becomes easier through SIP. Once you join SIP, money is auto-debited from your account every month and invested in the SIP plan. There is no need to do anything about this.
3. lock period
The lock Period means that you cannot withdraw money till this time. There is no lock period in SIP like other investment plans. You can withdraw your money from SIP whenever you want as per your need. The investor can invest or exit SIP as per his need. Its biggest advantage is that the money remains in the bank account and can be withdrawn whenever you want and the bank can never give that much profit by keeping the money in the bank account.
4. The risk is reduced
The risk in SIP is very low, the main reason for this is that no shares or units are purchased simultaneously. Rather, it is bought in pieces because the market keeps going up and down. Therefore, the average price of shares or units purchased through SIP remains low, which reduces the risk to a great extent. If you are investing for a long time then the risk is negligible. Investments are made together in the stock market due to which the risk becomes very high. But, due to the investment being made in small pieces here, it covers the risk to a great extent.
5. Tax exemption
SIP is exempt from tax. The investment made in SIP and the returns received are tax-free. But for this, it is necessary to invest for a certain time. This time limit has been set at least 3 years. If you want to get good returns then you should deposit money in a minimum lock period of 3 years.
6. Benefit of compounding
You must have studied simple interest and compound interest in 10th class. Compound interest is available in SIP. This means interest is given on interest. This means that the interest received on the money deposited every month is also included in the principal amount in the next month. Due to this the investor's profit continuously increases.
Features of SIP
If you want to understand SIP then think about Recurring Deposit. Because in this a fixed amount has to be deposited at fixed intervals. However, the interest rate in recurring deposits is also fixed.
1. You can invest a small amount every month.
2. SIP can be done for any period above one year.
3. In this the amount of investment is already decided. There is no change in this.
4. Mutual Fund Companies withdraw a fixed amount from your account on the fixed date of every month.
5. The process of withdrawing money from the account and purchasing mutual fund fund units is automatic.
6. Since this is just an investment method, each monthly installment is a separate investment in itself.
How SIP works
1. Sip has made investing in Mutual Funds easier. Because now with just one effort, investment is made every month in mutual funds and fund schemes.
2. To invest through SIP, you will have to fill out the investment form in a mutual fund.
3. In the form, select SIP as the method of investment.
4. In the same form you will have to give the mandate for Auto-Debt. With this, the fixed amount will be automatically deducted from your account every month.
5. After submitting the form, the mutual fund company will withdraw the amount from your account on the scheduled date.
6. This amount will be used to buy units of the Mutual Fund Scheme. Mutual funds, and fund units will be purchased at the price of that day.
7. Since the price of mutual fund units keeps changing every day, sometimes you will get a unit cheaply and sometimes it will be expensive. When it is available cheaply, the number of units will be more. If the unit is costly then its number will reduce.
8. In this way you will keep getting Mutual Fund Units at different prices.
How to open an account to invest in SIP?
The best way to invest in Mutual Funds is SIP i.e. Systematic Investment Plan. For this you can open an online account.
1. Basic information
First of all, you have to give your personal information in the online form. This will include your name, date of birth, mobile number address, etc.
2. Upload Documents
In the next step, you will have to upload the scanned copy of your PAN card and any document as address proof.
3. Video call
After this, you will have to do in-person verification. For this, the fund house will ask you the time when they can make a video call to you. You will have to prove your physical existence through a webcam. You need to keep your PAN card and address proof ready as you may be asked to show these during the video call.
4. Aadhaar-based e-KYC
If you have Aadhaar then the whole process can be extremely easy. Enter your Aadhaar number and then get it authenticated through OTP. If you get e-KYC done through Aadhaar, then there will be no need for any kind of verification through video call. However, if you do not provide PAN details then you cannot invest more than Rs 50,000 in a year.
5. Final step
After this, you will have to go to the website of the fund house and search the registration link for a new account. After this, you have to click on the log-in button. After this a new link will open in front of you and you will be able to create an online transaction account. During this time you will have to keep your checkbook and mobile ready.
6. Bank details will have to be given
Bank details will have to be given and after that, the account will have to be verified through an OTP. Once the account is created, log in and select the mutual fund scheme. After this select the SIP date and submit the request. After this, your SIP will start.
