SIP is an investment vehicle that allows you to invest a small amount periodically towards a mutual fund scheme of your preference. Investors can set the investment parameters, including the investment frequency, amount and the date of each instalment.
Once activated, the SIP will deduct a fixed amount periodically from your bank account to the mutual fund. The auto-debit feature makes for an easy investing experience and encourages disciplined financial planning. You can also pause and restart investments as per your needs.
SIPs allow you to extend your investment over time, ensuring that you can reach your financial goals. It spreads over investment risk across a long period and lets you benefit from both rising and falling markets. It also allows you to benefit from the power of compounding for better returns.
Given are the steps to invest in a mutual fund via SIPs:
After you submit all these details, the AMC will send an acknowledgement through email and SMS. They will also allot the units of the first instalment as soon as the payment gets processed.
Expected return rate (p.a)
Time Period (Years)
Also Read: What Is A Gold SIP Calculator?
SIPs allow you to buy units of a mutual fund with a fixed sum at a pre-decided date every week, month or quarter (depending on your plan). Like a recurring bank deposit, the SIP will auto-debit a fixed amount based on standing instructions that you have given to your bank. Each instalment will be used to allocate units of the mutual fund based on the scheme’s latest Net Asset Value (NAV).
When the markets are down, the SIP purchases more units, while in surging markets, fewer units are purchased. This allows you to benefit from both bull and bear markets. Over time, the purchase costs of fund units average out, leading to more savings.
Mrs Ghosh has a monthly salary of Rs. 40,000 and has set 10% of her salary as monthly SIP to ABC mutual fund. Over 10 years, she would have invested Rs. 4.8 lakh. This substantial investment shows how consistency and financial discipline can help grow a large corpus.
Her investment into the capital market saw an average return of 12%. It is not uncommon for a good mutual fund to outperform the market. Thus, her investment would be worth Rs. 9,29,356, a little less than twice her total investment. This demonstrates the power of compounding on investment over many years.
Navi US Total Stock Market Fund of Funds allows investors to get exposure to the US equity market at low costs. You can invest in Navi’s mutual funds with a SIP of only Rs. 500 per month on platforms such as Kuvera, INDMoney, Paytm Money, Zerodha and Groww. Visit Navi Mutual Fund to know more.
Also Read: Top 8 SIP Plans To Invest In India
A Systematic Investment Plan is a great tool for you to get started on your investment journey. Using it, you can reap considerable returns long-term with a small sum. It is easy to invest through SIP online and helps to inculcate the habit of regular savings. SIP investments also reduce investment costs and the risks of market volatility.
Ans: You will need to inform the fund house that you want to stop the SIP. To do this online, log in to your investment account with the fund house and submit the ‘Stop SIP’ form. Otherwise, you can do this physically by going to the branch of the fund house and submitting a duly filled SIP cancellation form.
Ans: Any first-time investor for mutual funds needs to do the one-time KYC mandatorily. You can choose to undergo this KYC verification on the website of any fund house or RTA (Registrar and Transfer Agents). You will need to submit your PAN, address proof and photo to complete online KYC.
Ans: The SIP calculator is an online tool that helps you estimate the returns you will get on your SIP investments. To calculate what returns you will get, enter the monthly investment, expected rate of returns and investment period.
Ans: The 15x15x15 rule is an investment strategy for accumulating Rs. 1 crore through SIP investments. According to this, you need to invest Rs. 15,000 per month via SIPs for 15 years. If you invest this amount in a mutual fund offering at least 15% annualised returns, you will be able to become a crorepati.
Ans: You can increase the SIP amount only in case of a top-up SIP with provisions of changing investment amount. This can be done from the SIP account on the fund house’s website. You can also opt for step-up SIPs when starting investment to automatically increase the SIP at regular intervals.
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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