SIP or Systematic Investment Plan is the essential concept nowadays towards mutual funds investment. Let’s begin the discussion of How to Invest in Mutual Funds through SIP online.
It is a plan where a person can invest small amounts in a mutual fund on a monthly or quarterly basis.
SIP’s role is to divide the investment amount over the investment duration and thus to give the ease of choosing your amount and frequency, which makes it an excellent investment option for any investor.
The benefits that SIP provides are listed below:
- You can invest in small amounts and also choose the frequency along with the duration. Thus there will be no burden or pressure to invest.
- Helps you to meet your long term financial goals by breaking your bulk investment into smaller parts.
- It gives you the freedom from a constant search for opportunities to time the market.
In SIP, a specific amount is deducted from your bank account every month/quarter as per your set frequency on an ECS basis and gets invested in the mutual fund scheme you have chosen. On every investment, the units of the system are allotted to the investor.
As your total investment gets broken down into simple components of investment, the ups and downs of the market do not affect much and result in averaging your cost. Investor, that is, you have all the rights to redeem the units or switch out to another scheme at any point of time.
SIP gives you the liability to start an investment with an as little amount as Rs. 500 per month. The SIP option is available for almost all kinds of mutual funds including liquid funds, although it works best for equity investments.
But one thing to be prudent of is that you should ensure that there is an availability of adequate funds in your bank account, as in case of ECS deductions your payment will be missed and you cannot pay the lost SIP amount at a later date.
Also, penal charges may be levied by the bank. So, for beginners, investments in mutual funds should be started with SIP to have financial ease of placement and also stability to the market wherein the scope of maximizing the returns gets higher.
This scheme is best suited for salaried workers and if you are a so with a thought of investing in mutual funds, go ahead, but make sure to consider SIP. And lastly, remember, mutual funds are subject to market risks, read all scheme related documents carefully. This is How to Invest in Mutual Funds through SIP online. Source
Hi, I’m a Financial Operations Specialist, having an experience of over 12+ years. I have worked with a major financial institution like Goldman Sachs, in their investment management division. During my term with Goldman, I’ve worked on derivatives, hedge funds, futures, etc. I also have experience in manufacturing industries in Credit Risk Analysis and Approval to the clients for prospective businesses with the parent company. I’ve got a financial degree from Vinoba Bhave University.