what is SIP
Mutual funds are a great way to help you reach your financial goals. They act a roadmap to your financial goals. Be it a short-term financial goal or a long-term financial goal, investing in mutual funds can help you achieve it. There are two ways to invest in mutual funds – lumpsum and SIP (Systematic Investment Plan). Under a lumpsum investment, an investor makes an individual investment in a preferred mutual fund scheme in one go. On the other hand, SIP investments allow investors to invest multiple times during the entire course of their investment tenure.
Let’s quickly recall what is SIP. A SIP is a facility offered by several mutual fund houses to invest in a disciplined manner. To inculcate the habit of saving and investing, it makes sense to set aside small amounts to be invested regularly. This permits investors to manage their daily expenses while creating a good and significant investment corpus for their future needs. To invest in SIP, investors can choose from a varied list of investment products, like mutual funds, stocks, and recurring deposits. This article will cover how to make SIP investments in these investment options.
SIP investments in mutual funds
Investing in mutual funds via SIP mode is quite simple. The investor is required to fill up a mutual fund investment form along with KYC (know your customer) form and provide supporting KYC documents.They also need to provide investment details such as desired mutual fund scheme, investment option (dividend or growth), investment amount, investment tenure, frequency of the SIP investments (It can be daily, weekly, fortnightly, monthly, quarterly, semi-annually, or annually) and SIP date must be mentioned in the form. They also need to provide a bank auto-debit NACH (National Automated Clearing House) mandate along with a copy of a canceled cheque.
SIP investments in stocks
Investors holding a Demat account can set up SIP investments in stocks with the help of their brokers by using their broking platforms. Investments can be made in a basket of stocks on a regular basis, or in a pre-defined theme, or in stocks selected by the investor, according to the monthly amount instructed set up by the investor. This can be easily done by using the mobile applications or online platform of brokers. Similar to SIP investments in mutual funds, the stock SIP date, frequency of the investment, investment amount in stocks, allocation to different shares needs to be specified before setting up stock SIP.
SIP investments in Recurring deposit
One of the easiest ways to set aside extra funds in your savings bank account is by setting up a recurring deposit using a SIP investment. This is an instruction to automatically transfer extra funds lying in the savings bank account to a separate fixed deposit account or a recurring deposit account. These instructions can be set up by either visiting the bank branch or by using net banking.
Remember, SIPs go a long way to help you reach your financial milestones. Use them properly and you’ll see positive growth in your portfolio. You can also use a SIP calculator to project the future value of your investments. You can also use this mutual funds SIP calculator to provide you with a required SIP investment amount to reach a specific corpus. Happy investing!
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