Six easy steps to open an SIP online for those new to mutual funds

Systematic investment plans are a great way to invest in liquidity is an issue. What's more, they also reduce to impact of market volatility to some extent

Mutual funds are a great way to invest in equities and debt instruments for those whose understanding of the stock and securities market is limited. This is because when you invest in a scheme, the burden of earning a return on your money lies with an expert investor—the fund manager at the asset management company. 

You can choose to put in lump sum amounts or stagger your investments under a systematic investment plan (SIP) over several months, in case you want to preserve liquidity.  The monthly amount that you commit can be as low as Rs 500. An SIP also offers protection against market volatility, as it allows the fund manager to buy stocks either on dips to reduce the average cost of holding, or in a rising market to cash in on the uptrend.

Investing in a SIP

There are two ways you can invest in mutual fund SIPs. You could either take the assistance of a distributor or open an SIP online. The former involves filling out an application form, and submitting hard copies of the KYC documents in person. The latter is easier and can be done sitting at home or the office, obviating the need for human interaction and taking photocopies of documents investors may find it easier to open a SIP account online investment in today's world thanks to the development of digital platforms. In point of fact, you can start a SIP account online from the convenience of your own home. 

Mutual funds are a great way to invest in equities and debt instruments for those whose understanding of the stock and securities market is limited. This is because when you invest in a scheme, the burden of earning a return on your money lies with an expert investor—the fund manager at the asset management company. 

You can choose to put in lump sum amounts or stagger your investments under a systematic investment plan (SIP) over several months, in case you want to preserve liquidity.  The monthly amount that you commit can be as low as Rs 500. An SIP also offers protection against market volatility, as it allows the fund manager to buy stocks either on dips to reduce the average cost of holding, or in a rising market to cash in on the uptrend.

 

Opening an SIP online in six easy steps

Step 1: Collection of documents- You would require a PAN card, an address proof such as a driving license, bank statement, utility bill, or aadhaar, along with a passport-size photograph in JPG or PNG, and a cancelled cheque for bank details.

Step 2: KYC Compliance- Once the documents are ready, you can do the KYC on any AMC or RTA website that offers an online or e-KYC facility. Other details that you must provide include name, date of birth, mobile number, and address. Along with this you must upload a soft copy of proof of address, PAN, identity, and a passport-size photograph. A video call is often conducted for IPV (In-Person-Check) to affirm the details. In addition to KYC, you must answer certain questions online to complete the FATCA  (Foreign Account Tax Compliance Act) formalities.

Step 3: Sign up with the AMC website- To begin an online mutual fund SIP, you must complete the steps listed below as well Upon completing the e-KYC documentation, you must click the "Register Now" or "New Investor" tab, and provide your PAN number, personal information, nominee information, bank information, and answer a few FATCA questions. After this, a User ID and password for online transactions will be generated.

Step 4: Decision of scheme and plan- At this stage, you can decide the SIP amount and investment plan. You can either go for daily plans or direct plans and choose only the growth option purpose like payout option or reinvestment option. It is important to know beforehand that investors cannot pick for reinvestment option if they have already chosen the ELSS plan.

Most AMCs offer an online SIP calculators to help you choose the a suitable scheme that is in sync with the amount you plan to invest each month. You can choose any scheme/investment plan accordingly by using this online tool.

Of course, in case, you already have a few matches then you can directly fill out the form in the given space without wasting much time.

Step 5: Payment mode- Select the dates and make payments for the first SIP instalment after deciding whether to invest daily, weekly, monthly, or quarterly. The next step is choosing how to pay. The amount can be automatically deducted from your account by registering for OTM (one-time mandate), net banking, or NEFT/RTGS payment.

Step 6: Time for a transaction- The information you’ve furnished online is sent to the AMC, which acknowledges receipt via SMS and email. You will receive an email with a Statement of Account (SOA) if the transaction is submitted within the stipulated time frame for that scheme. After 15- 21 days (depending on the AMC) from the initial investment date, you can typically select the date of the subsequent SIP. Before the due date for the subsequent SIP instalment, the AMCs will notify you via SMS and email.

In case there are any difficulties in setting up the SIP, the AMC's service team typically assists by writing to you or calling to resolve the issue. You can also log in to the AMC website to see where they are investing.

Note, that if you have already complied with mutual fund KYC, you can open an online SIP by going to the AMC website and providing your PAN number when asked. The AMC will check your KYC status and you can then follow the steps to open an online SIP account.

Summary- SIPs work well for investors who can’t or don’t want to commit large sums. Investors are often intimidated by the substantial savings required for specific objectives such as home ownership or retirement. You may want to begin saving modest sums and gradually step up.