Different ways to set up a mutual fund SIP

Different ways to set up a mutual fund SIP

Investments are an integral part of our lives as they allow us to accumulate wealth in the long term. Although there are various investment tools in the market, choosing a mutual fund SIP can be beneficial. Since mutual fund investments can be started with a minimum amount, you can build an ample amount of wealth for your future goals.

Before you invest in SIP through mutual funds, let’s understand what is SIP in detail:

What is a Systematic Investment Plan (SIP)?

A Systematic Investment Plan, or a SIP, allows you to invest a fixed amount in mutual funds on a regular basis. When you invest via SIP, the amount is deducted from your account every month and directed towards your mutual fund scheme. This not only makes you financially disciplined but also balances market volatility.

As per Market Mavens, SIP investment is excellent for those who earn a salary income. To invest via SIP, consult a financial expert to evaluate the suitability of mutual funds across different categories to ensure it meets your investment objectives.

Here are a few handy tips you should follow before you invest in SIP:

  • Know your investment objectives, whether short-term or long-term. While your short-term goals might be travelling or buying a new house, your long-term goals can be building a retirement corpus or planning your child’s dream wedding.
  • Consider your risk appetite. As an investor, your risk appetite might vary from high to low. It usually depends on your financial responsibilities and current age. For instance, your risk tolerance is high when you have fewer financial obligations at a young age.
  • Before diving deep into a SIP investment, conduct thorough research on various alternatives available in the market. Compare multiple mutual funds and make the final selection based on your investment goals and risk tolerance level. Moreover, look at the past fund performance as well.

Earlier, SIP investment was only possible offline. However, the emergence of technology lets you invest in SIP mutual funds online today. Let’s look at the two different ways to set up a mutual fund SIP:

  1. Offline

For an offline investment, you need to fill up a SIP form with all the details like the SIP amount, periodicity, etc. Also, attach copies of a cancelled cheque and your KYC documents, including your ID and address proof. Submit the form and the KYC documents along with an auto-debit National Automated Clearing House (NACH) mandate at an investor service centre.

  1. Online

Under the online mode, you can set up a mutual fund SIP using the following facilities:

  • Mutual Fund Transaction Portal

Usually, you can find multiple transaction portals for mutual funds, which are either run by the registrars of the fund house or mutual fund utilities platforms.

  • Fund House Website

Many fund houses provide the i-SIP facility, wherein you have to submit your personal and bank details directly on the website. Later, log in to your bank account and mark yourself as a biller. Typically, the Update Request Number (URN) is required to facilitate SIP instructions.

  • Distributor Portal

Corporate distributors or banks offer online mutual fund transactions on their portals. In case you have already registered a bank mandate for auto-debit on the portal, it becomes easier to set it up for a mutual fund SIP.

To sum up, mutual fund SIP investment is an excellent solution for accomplishing new dreams and aspirations. Whether you go ahead with the online or offline mutual funds’ investment is your choice. However, the online method is convenient for today’s busier generation. Happy investing!

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