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You heard about SIP in Mutual funds. Thinking to invest your hard
earned money through the SIP route.
What to do, how to move ahead and park your funds in the best
possible manner through SIP ?
What should be your plan of action once you decide to invest in SIP ?
How to go about it ? What are the steps for investing in SIP and how to
proceed further ?
These are the various queries that might worry you again and again.
With the help of this blog I will try to answer your queries and clear your
doubts so as to help you invest your money in an ecient way.

What is SIP or Systematic Investment

Plan?
SIP i.e. Systematic Investment Planis a common method followed for
wealth creation in the long run.People generally get confused as to SIP
is some investment or product.But,you should be clear that this is just a
method or way of investing.Instead of putting a lumpsum amount
altogether, you just have to set your own budget and put small small
amounts every month through SIP.
When you invest money through SIP, your money is invested in Mutual
funds.Mutual funds further invest your money in :
Debt Instruments Debt Mutual Funds.
Equity Equity Mutual Funds.
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The returns are based on the performance of these funds over a period
of time.Mutual Funds are subject to market risks, so you need to be
extra careful while investing in it.But,based on historical data and past
performance MFs perform well over a longer period.

Investing your money in Mutual funds, that too by opting the SIP route
is considered the best long term investment option,for growing your
money.
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The Companies that deal in Mutual Funds are known as Asset

Management Companies where the underlying asset is Debt or
Equity.Almost all major banks like SBI,Axis Bank,ICICI,HDFC,BOI etc.have
entered the Asset management business and provide mutual fund
services.Other than banks there are various Companies that give you
the opportunity to grow your money by investing in Mutual Fund
Schemes like Reliance,Aditya Birla etc.Also,there are various robo
nancial advisors like Bodhik.comthat help you invest in Mutual Funds
in a systematic way and further guide you to build a Balanced Financial
Portfolio.
By Starting SIP ,you can build a good corpus based on :
Power of Compounding : This means you earn interest on
Principal of previous year + Interest of Previous year i.e. you earn
interest on your earnings also.
High rate of returns : You tend to earn high returns by investing
in Mutual funds as compared to traditional investment tools like
PPF,NSC,Bank Fixed Deposits etc.
Benet from Cost Averaging : In simple words,buy more units
when Net Asset Value is low and less units when the market
rises.This leads to reduction in average cost of purchasing.
Must Read : What is SIP ? What are benets of investing through SIP ?
Through this blog,we will be discussing 10Simple Steps that you need
to follow to start your investment in SIP or Systematic Investment Plan.

10Simple Steps that you need to follow

to invest in SIP :
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1.Decide Your Finance Goals : Before planning any kind of Investments,

you need to be clear and specic about your short term as well as long
term goals.SIP is considered best long term tool, so you need to focus
on your long term objectives preferably.You can plan investing money
based on multiple goals like :
Retirement planning.
Children education and their marriage.

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Family vacation.
Buying a House etc.
Your Finance goals will be the deciding factor as to how much Debt and
Equity Investments you can aord to make.
Must Read : 10 Financial Planning Tips to follow in Your 20s !
2.Measure your Risk Appetite : Know your Risk appetite, as to how
much risk you are willing to take Low risk, moderate risk or high
risk.Before Investing,try to understand your needs and risk horizon.This
factor is somehow correlated to your age i.e. at a young age you can
take high risks.But,as you grow up in years, you normally tend to shrink
your risk area and start looking for safer investment options.
Its better and advisable to start investing at an early age, to get maximum
returns and build an ecient Investment portfolio.
3.Plan Your Investment Horizon : Generally, SIP is considered best for
Long term Investments but you need to be more specic as to for how
much duration you want to invest your money.Your duration based on
your nance goals can vary anything from a short duration of may be 3
years to a very long duration of say 20 years.This is a matter of personal
choice and depends on individual preferences.
4.Invest Online/ Oine : You have two alternatives as to Invest Oine
or Online.To avoid the hassles of going and submitting the forms and
documents manually to Mutual Fund Company/Banks, you should
prefer Online method of Investing.There are various Online Mutual
fund Platforms where you can easily ll the application forms, upload
your
documents and requisite proofs and go ahead with the process of
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investing.
So,having an Online account will have long term benets wherein you
can operate your account and invest your funds with much ease.
5.Invest Directly or Through Financial Advisor/Third party :You can opt
to invest directly if you have the knowledge and experience in the eld
of investing.Direct plans usually carry less charges.

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But,if you are new to investing and dont have any knowledge as to how
to start, it is better to take take the help of Financial Advisors. After the
registration process is complete,the Mutual fund companies also
allocate a Fund Advisor to you, who will guide your way and make your
investment journey easier.
6.Know Your Customer or KYC Form :Completing your KYC details is
the basic requirement while starting an SIP.Being a prospective
investor, you need to ll a KYC form and submit it to the Fund house
along with necessary proofs.It is a one time procedure,so once you
fulll KYC requirements, you can freely carry your investments.
The 3 main proofs that need to be provided are :
PAN Card Copy as ID Proof
Address proof like Aadhar,Passport or Voter card.
A Cancelled Cheque
It is mandatory to comply with KYC requirements before investing in
Mutual Funds.
7.Choose the Fund Type : Figure out the dierent kinds of funds
available and choose the one that best suits you.Do some detailed
research,based on the past performance,the market trends and returns
generated over the previous years.Although,you cannot rely completely
on past performance since they are just an indicative factor and not any
kind
of assurance to yield high returns.
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You can select any of the following Mutual Funds based on your
nance goals,risk factor and Investment duration :
Debt Funds Invest in Debt Instruments.Debt funds are
considered a safer investment options as compared to equity
funds because the underlying asset is Debt.
Equity Funds Equity funds invest in Equity so are best suited
for the ones who can aord high risk prole.A SIP in Equity funds
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is normally considered as a good option for the investors who

prefer to invest their money for a longer duration.These usually
perform well if invested for a longer duration.
Hybrid Funds Hybrid Funds invest in a combination of both
equity and debt i.e.you get exposure to both equity and
debt.These are also known as Hybrid Funds.
Before investing anywhere,you should make yourself clear about the
various asset classes.For details you can refer : What are dierent
asset classes ?
8.Choose the Amount and Date of SIP :Each Mutual Fund
Company/Bank has its own dates for investing.You can choose a date
for monthly investment as per your convenience.Generally,the dates
are 1,5,10,15,20,25 but these can vary based on dierent
companies.You can select multiple dates for investing through SIP in
dierent funds.
Calculate the SIP amount you want to invest every month.Based on
your Income and Savings,x an amount you want to invest in
Mutual Funds through SIP.A minimum investment of Rs.500 is
normally required.But,this might be dierent for dierent
companies/banks.
9.Decide Mode of Payment Manual Transfer/Auto Debit Facility :You
can opt for Auto Debit facility i.e. money shall be automatically debited
from your account each month as per your standing
instructions.Hence,you can avoid the trouble of manually transferring
SIP amount every month.You just have to ll an Auto debit form in this
regard authorising the bank/fund house to deduct the payment.
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You can manually transfer the SIP amount or give post dated cheques
also in order to make regular SIP payments.
10.Submit Application Form : You haveto provide your particulars in
the Common Application Form.Fill the details as asked and paste or
upload your scanned passport size photograph.After giving the KYC
details,selecting the fund type,the date and amount of SIP
andsubmitting the Application form you are almost done with the
compliance and SIP procedure.
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So,now you are ready to start your monthly SIP journey, invest safely
and enjoy the returns !
Also,make yourself aware aboutTaxes on mutual funds to help you in
your tax planning.
Dont hesitate to take the help of an experienced Fund Advisor/Financial
Advisor if you have any doubt.Its your money and you have every right to
know where and how you are putting it.
Further,Diversication of Funds is the key to getting maximum returns
in the long run.Split your investments in a variety of Mutual funds
i.e.you can focus on dierent asset class like Debt and Equity as per
your risk horizon.
If you want to add anything, any information or opinions, feel free to share
your valuable feedback.Dont hesitate to share the blog with your family
and friends so as to make them aware on this topic.
Enjoy your SIP journey !
Happy Investing !
Also go through ELSS or Equity Linked Savings SchemeandBest Long
Term Investments in India.

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