Home Loans
Personal Loans
SME Loans
Business Loans - Udyog Plus 
Loan Against Securites
Loan Against Property
Mutual Fund
Stock and Securities
Wealth
Portfolio Management Services
Pension Funds
Life Insurance
Health Insurance
Wellness Solutions
Pay Bills
Pay for anything
Pay Anyone
Pay on Call
Payment Lounge
Credit Cards
1800-270-7000-
Our Products
-
Self Care
- Downloads
- Learnings
- About Us
-
More
-
Shareholders
-
Shareholders
-
Updates
-
-
Wealth Calculator
-
Shareholders
ABC Solution 
Loans
Insurance
AppStore
PlaystoreAditya Birla Sun Life AMC Limited
Aditya Birla Sun Life AMC Limited
How to Invest in SIP?
Sep 22, 2022
5min | Views 1878
As per AMFI, there are 56.2 million SIP accounts in India as of July 2022. Noticeably, investing in mutual funds through SIPs is increasingly becoming popular in India. The investment flexibility and the other benefits SIPs offer them an attractive option for retail investors. SIP can be the best way to invest in mutual funds regularly in small quantities. Check this post to learn more about SIP and how to invest in SIP.
What is SIP
A Systematic Investment Plan (SIP) is an investment option where you can invest small amounts regularly in a mutual fund. It is a great way to create a mutual fund portfolio by investing regularly without committing a significant amount upfront.
How Does SIP Work?
Before knowing how to invest in a SIP, it's vital to understand how a SIP works. When you invest in a mutual fund scheme, you will mostly have the option to invest a lump sum amount or start a SIP. Upon selecting the SIP mode, you'll need to provide the SIP amount you want to commit and the frequency. Most investors choose the monthly SIP cycle.
Once you begin your investment, the SIP amount is deducted from your bank account and invested in the mutual fund scheme every month on a fixed date. You can stop or change the SIP amount at any time. You can use an online SIP calculator to calculate your monthly SIP amount and the potential return at the end of the SIP term.
Let’s understand the process better through the following example.
Suppose you’ve decided to invest Rs 10,000 monthly in a Flexi-Cap fund that generates a return of 11% on your investments*. *Note that the actual returns may vary as per market conditions.
Now, if you continue your SIP for ten years, your total investment and return will be as follows.
Particulars |
Details |
Monthly SIP |
₹10,000 |
Investment Duration |
10 years / 120 months |
Total SIP amount (10000 X120) |
₹ 12,00,000.00 |
Average Growth Rate |
11% |
Total Investment Value after 10 years |
₹21,24,110 |
Net Growth |
₹ 9,24, 110 |
Disclaimer: Please note that these calculations are for illustrations only and do not represent actual returns.
The above example demonstrates the power of compounding in SIPs. Even with a monthly SIP of ₹10,000, you can significantly grow your investment corpus if you stay invested for a long time.
Benefits of Investing in SIP
Apart from the power of compounding, investing in SIP offers the following benefits.
Rupee Cost Averaging
You can never time the markets perfectly, and you shouldn’t, as per experts. With SIPs, you don’t have to time your investments. As your investment amount remains fixed irrespective of market conditions, the number of units you purchase are automatically adjusted according to the prevailing market conditions. You get more mutual fund units when the market is low and lesser units when the market is high.
As a result, if you keep investing for a long period, your average purchase price-
- Will be reduced in a falling market.
- Will remain in check in a rising market as you'll buy fewer units.
Therefore, SIPs better position your portfolio to ride through short-term market volatility.Financial Discipline
Apart from encouraging savings, SIP also helps you develop financial discipline. A monthly SIP pushes you to set aside a fixed amount for investment every month.
Ease of Investing
Investing in SIPs is an easy and hassle-free process. Especially if you know how to invest in SIP online, the process becomes much faster and simpler. You don’t even have to remember the SIP dates. Just set the standing instructions in your bank account, and the amount is automatically deducted.
Read about : Benefits of Investing in Mutual Funds
Where to Invest Through SIPs?
Before you understand how to start a SIP investment, you should first know where to invest. For selecting the right mutual fund, ask yourself some important questions, such as-
How much amount are you ready to invest in a month?
What are your long-term and short-term financial goals?
Do you have a high-risk appetite, or do you like to play safe?
For how long do you plan to continue your SIP?
You can also add more questions to the list. Based on the answers to the above questions, you can choose from a plethora of mutual fund schemes.
For instance, you can start SIP in funds that invest in small caps and emerging businesses if you don’t mind the higher risk involved. Conversely, you may want to invest in a balanced fund if you like to take calculated risks for long-term wealth creation.
Next, check the fund house’s reputation, the performance of the fund manager, and the scheme’s past 5-year returns. Finalise the mutual fund scheme that best suits your purpose and start SIP in the fund
How to Invest in SIP?
Once you understand how to start SIP online, you can begin your SIP investments from the comforts of your home or office. Following are the steps involved.
Step 1: Arrange the necessary documents
Arrange all the documents you will need to start SIP investment. You will need a PAN card, address proof (Aadhar card/driving license/ utility bill/bank statement), passport size photograph, and cheque for the bank details.
Step 2: Complete your KYC Compliance
As per SEBI regulations, it is mandatory for every investor to be KYC compliant to invest in mutual funds. You can get your KYC done by submitting filled in KYC form to the AMC website or Registrar and Transfer Agents (RTA) website which provides e-KYC facility. For e-KYC, You will need all the documents mentioned in step-1. A video call for in-person verification will also be required to confirm the details.
Step 3: Register with the AMC website
Visit the official website of the mutual fund house and click on the 'Register Now' or 'New Investor' tab. You will be asked fill up a simple form with your basic details such as PAN number, personal details, bank details, nominee details, and answer few FATCA questions.
After this, choose your username and password for transacting online.
Step 4: Choose investment amount and scheme
The next step in how to invest in SIP is, to select the mutual fund scheme of your choice and specify the investment amount. Next, select the investment type to SIP and proceed further. Enter your investment details, such as the SIP amount, SIP term, periodicity (monthly, quarterly, yearly), etc.
Step 5: Choose the mode of payment and date
Once you have made a decision regarding the frequency of your SIP investment, whether it's daily, weekly, monthly, or quarterly, the next step involves choosing specific dates and initiating the initial payment for the first SIP installment.
Next, you have to choose the mode of payment. Several options are available, including automatic debit through one-time mandate (OTM) registration, net banking, or NEFT/RTGS payment, allowing the amount to be deducted from your account.
After making the first SIP payment, you can set up the next installment at a gap of 15-30 days. The SIP will continue till the end period chosen by you.
Step 6: Submit transactions
Once you fill in the necessary details, your request is sent to the AMC. Shortly after, you will receive an acknowledgement from the AMC through email and SMS confirming the receipt of your request.
If the transaction is submitted during the designated cut-off timing for the specific scheme, you will be allocated the units on the very same day. You will also receive Statement of Account on the email.
Start Your SIP Today
Goal-based investing is the key to building a portfolio that helps you achieve your dreams through investments. SIP investments allow you to fix your goals and break them down into monthly investments you need to make to get there. So fix your goals and start a suitable SIP today. If you can't select the right SIP, get in touch with an investment advisor that can guide you.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Our Experts
Tools and Calculator
RSS News Feed
Archives
Close
Hover to Zoom
Thank You
Message will change according to your requirement.