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Mutual fund investments have gained immense popularity among retail investors in the past few years. One of the primary reasons why mutual fund investments have bloomed so well is the ever-popular systematic investment plan (SIP). No, SIP and mutual funds are not inter-related. SIP is merely an investment tool that can permit you to invest in mutual funds in a disciplined manner. Hence, you do not invest in SIP per say. Rather, you invest in mutual funds through SIP mode of investment. In this article, we will understand how you can easily invest in SIP mutual funds in 5 simple steps.
Steps to invest in mutual funds through SIP
Following are 5 steps that can help you invest in SIP mutual fund:
- Clearly define your investment goal
Before you go ahead and invest in mutual funds through SIP, it is important to clearly define your financial goals. You can determine your investment objectives by considering certain parameters such as your income, debt (if any), etc. Once you have laid out your financial goals such as saving for a new house or your daughter’s education or marriage or planning a foreign trip or even saving for your own retirement, you can evaluate the time horizon needed to achieve these goals.
- Type of investment
Once you have clearly defined your investment goals, you must carefully assess you risk appetite. Depending on your risk profile, you might be classified as either conservative investor or aggressive investor. Once you are clear on your financial goals, investment duration, and risk appetite, you might be able to choose the right types of investment that aligns with your portfolio. If you are unable to decide the right asset allocation mix for your portfolio, you might consider availing of services of a financial advisor or expert.
- Fill out your KYC details
KYC compliance or know your customer is a necessary mandate required to be filled by investors to invest in mutual funds through SIP mode of investment. You need to provide certain details such as your full name, address proof, date of birth, phone number, etc. and send it across along with your PAN (permanent account number) card details.
- Select the SIP details
The next step requires an investor to clarify about their SIP investment details such as investment amount, frequency of your investments, duration of investment, the date on which the investment amount would be deducted from your bank account and used to buy SIP mutual fund units, etc. SIP investments are quite flexible in nature and you can choose these details that best cater your investment needs.
- Invest in SIP
Once you have decided on the above-mentioned data, all you need to do is either physically go to the office of the fund house or directly head to their website and invest in mutual funds online. After creating an account with your desired fund house or AMC, you will be able to invest in mutual funds through SIP mode of investments in just a few minutes. And voila, investing in mutual funds through SIP mode is that simple and quick.