How to Plan Your SIP Investment?

Data released by The Association of Mutual Funds in India has revealed that the total number of mutual fund SIP accounts has skyrocketed to an impressive 53.9 million as of April 2022! The raging popularity of SIPs is because they are highly manageable, can be started small, and are also highly profitable when planned over a while! You can check the profitability with a SIP calculator for clarity! 

The Basic Concept of Systematic Investment Plans 

SIP (Systematic Investment Plan) is a slow and disciplined cycle of investing in mutual funds. It requires an investor to set aside a stipulated amount of money on the same day of every month. The amount is automatically debited on that day and credited as mutual fund units depending on the NAV for that particular day. A SIP calculator is used to arrive at a fair idea of the cumulative amount that would be earned at the end of the investment tenure. 

Here are a few guidelines on how to invest in systematic investment plans.

Choosing the Right Mutual Fund, Date, and Amount

Making a personal financial plan is a great start. Define your goals. If the goal is long-term, equity fund investment plans are best suited. Select a fund based on performance consistency and past track record. 

Once the fund has been selected, zero in on a date. If your salary date is the 3rd of every month, for instance, keep the SIP date around the 7th. Keeping a buffer of about 3 to 4 days is good in case salaries are delayed in certain months owing to unprecedented circumstances. 

Finally, the amount that is to be invested every month should be decided upon. Keep your long-term and short-term goals in perspective. Choose a mutual fund SIP calculator for help. Ideally, the beginnings should be small. Starting with a very large amount for SIP that may be difficult to sustain later on could lead to problems! Start small and step up as you proceed. Keep checking your progress on the SIP calculator and adjust the amount accordingly. 

Steps Involved in Investing 

  1. Register on the website of the fund house. You can also opt for a physical registration by visiting their office. You will be required to provide basic details including bank information and a copy of your PAN card. 
  2. Furnish KYC documents as asked by your fund house. This may take a few days. Post verification, you can proceed to account creation. 
  3. Select a mode of payment. You can opt for PDCs or automatic debit. The former could be cumbersome. Automatic debit is more convenient always. You will need to fill in the NACH form. 

The NACH form will have to be verified by The National Payment Corporation of India before your SIP can begin. Choose a good SIP calculator online for keeping the investment schedule on track. Never miss out on payment schedules once the SIP has begun. It will ruin the advantage associated with long-term compounding. When it comes to SIP investments, learn more about the workings of calculators for a complete and thorough understanding.

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