How to Invest in Mutual Funds through SIP Online

Every person wants their money to be invested safely, the purpose of such an investment is to multiply wealth and improve capital formation. A mutual fund is one such good option of investment.

To begin with, people often assume that such an investment requires a lump sum amount, but have you ever heard of a Systematic Investment Plan (SIP)? An SIP is the best way to allocate a small portion of your monthly income at any stage of your twenties-career. Not only does it automate the transactions, but also inculcates the habit of savings. Thus, investing in mutual fund SIPs should be an important part of your financial portfolio.

All mutual fund schemes are available online, an individual simply has to visit the website of their desired AMCs (Asset Management Company) or bank, submit an application of investment along with the duly filled KYC (Know Your Customer) documents and you are good to go into the world of systematic investment plan with a power of a click.

Once ready, you instruct the mutual fund or your chosen investment platform how much you want to invest every month and the money gets automatically transferred from your bank account and invested in the mutual funds of your choice.

Traditionally, an individual can also visit the branch office of their respective AMCs in person with a set a KYC documents to begin with the same. You are required to submit a filled up enrolment form along with a cheque, which is to be deposited on the date requested by the mutual fund. Thereafter, units will be credited to your account and a notification will be sent out for the same via email & SMS.

 

Why Mutual Fund SIPs?

 

Mutual funds are an excellent option to beat inflation and provide better returns than a normal bank account FD (Fixed Deposit). A mutual fund invests in the equities and bonds market which yield higher returns over a long period of investment. So, invest in the right mutual funds through SIPs!

 

Benefits of a Mutual Fund SIP Online

 

  • They are simple to begin with, you can start with a minimum amount of Rs. 100 or Rs. 500 per month
  • Online implies that the process is 100% paperless as you simply have to upload your KYC documents. All information regarding your mutual fund SIP is communicated via email.
  • It is lighter on your pocket as you have to shell a smaller amount every month rather than a big amount all at once. (It’s easier to pay Rs. 100 or Rs. 500 per month for a year, instead of investing a large amount at the same time)
  • Since the amount is invested on a regular basis, you get additional number of units in the falling market and fewer units when the value is high
  • Helps you meet your long-term goals of wealth accumulation through the power of compound interest
  • This entire process is hassle free as it is done online, an investor simply has to initiate a standing instruction (SI) with their respective banks and AMCs
  • Since the transactions happen online, it automatically inculcates a habit of savings. (You become a disciplined investor)
  • You get access to a well balanced portfolio of many stocks which diversify risk
  • Everything gets done for you via online platforms which make it even easier to invest in mutual funds by doing fund selection, annual portfolio review, automated investments and more, completely online

 

Thus, a SIP is a simple way to invest online, it helps you meet your financial goals such as home purchase, marriage and education for children.

 

Two important things to consider for a serial as well as a normal investor when investing in a mutual fund SIP online are - what are your financial goals & risk tolerance.

 

Financial Goals

 

Before you select a particular mutual funds SIP, it is wise to analyse your current financial holding with respect to future expectations. Whether it is long-term gains or regular income?

Will you utilise the money to buy a new car, new home, family or to meet your retirement needs?

Is there an option of early withdrawal, what is the lock-in period or will the money be tax-free? These questions are crucial for an investor as it assists in making sound financial decisions.

 

Risk Tolerance

 

Since mutual funds are made up of various stocks and bonds, they are certainly not immune to the volatility of the stock market. Appetite for risk means an investor’s ability to understand that the money invested for higher gains increases the risk as well.

 

Keeping these two things in mind, a Mutual Fund SIP is still the most convenient option for online investment.

Keywords

mutual funds , mutual fund online , systematic investment plan

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