Delve into the world of intelligent investing with Systematic Investment Plans (SIPs)! Whether you're a newbie or a seasoned investor, SIPs offer a straightforward and structured way to grow your wealth. But where do you begin?
In this comprehensive guide, we'll walk you through the process step by step, from how to invest in a systematic investment plan (SIP) to selecting the perfect mutual fund strategy. With this straightforward approach, you can pave the way to financial success.
How do SIPs work?
Systematic investment plans (SIPs) facilitate the transfer of funds from your bank account to your chosen mutual fund. Upon depositing the funds into your account, the mutual fund scheme you've opted for will allocate a predetermined number of units to you. The number of units allotted is determined by the scheme's net asset value (NAV) on that particular day.
SIP mutual fund investors accrue additional units by investing on a regular basis. You may opt to purchase more units when the market is down and fewer when it's up. Given the fluctuating NAV of the scheme, you have the flexibility to adjust your investment decisions accordingly.
How to start a SIP investment?
A systematic investment plan (SIP) may appear risky at first. You must know several things before starting your SIP. Let’s start discussing how to invest in SIPs.
Set investment goals
Begin by identifying your risk tolerance. Setting objectives is the first step in determining your risk tolerance. All investments entail risk, regardless of how well-planned they may be. Therefore, it's essential to establish your investment goals before crafting the perfect portfolio.
Choose a Mutual Fund scheme
Many plans are available for every individual. When selecting a fund, examine your short- and long-term objectives. Check the mutual fund's latest results before investing.
Application Process:
After selecting the desired SIP plan, proceed with the application process. This typically involves linking your Demat Account, completing the application form, submitting a cheque for the SIP amount (or direct debits), and fulfilling the Know Your Customer (KYC) requirements. However, the particulars may differ, depending on the institution. For example, with Axis Bank, you need not link your Demat Account since the Bank itself is a Mutual Fund distributors and RTAs credit money directly in Mutual fund folios.
Select SIP date:
Opt for a convenient date for the SIP deduction from your account. The SIP facility offers flexibility in choosing the commencement date.
Determine investment duration:
You must select how long to hold the investment to achieve your financial and investing objectives. Use a SIP calculator to estimate returns over time.
Choose between online or offline investment:
You have the option to invest in SIPs either physically or online. Choose the method that saves time and effort.
How much to invest in SIP?
Choose a defined amount to spend over time to determine how much to invest in a systematic investment plan (SIP). Looking at your financial objectives and spending may help you understand this.
Another way to predict investment growth is via SIP tools. The tools consider your monthly payment, spending time, and desired outcomes. They use a formula to predict the value of your systematic investment plan (SIP). These tools allow you to choose the right SIP amount according to your objectives and risk tolerance.
How to set SIP goals?
For systematic investment plan (SIP) goal-setting, follow these steps:
1. Define financial goals: Define your short- and long-term financial objectives and ensure you understand them.
2. Use SIP calculators: Online SIP calculators serve as valuable tools in determining the requisite monthly investment to achieve your financial goals. They take into account your required goal amount, investment duration, and projected returns.
3. Financial planning process: List your assets, debts, and income to assess your financial situation. Checking your monetary position should start with this crucial step.
4.
Explore investment options: Before selecting an investment avenue, familiarize yourself with various alternatives that align with your risk tolerance and financial objectives.
Following these steps enables you to devise a systematic investment plan (SIP) strategy tailored to your financial goals and personalised targets.
Factors to consider before investing in SIPs
When learning how to invest in SIPs, remember these key points:
1. Assess financial requirements:
Investing in SIPs aims to fulfill long-term financial goals across diverse areas such as retirement savings, emergency funds, or asset acquisition.
2. Evaluate SIP returns:
Upon determining your risk tolerance, utilize SIP tools to estimate the requisite monthly investment to attain your desired portfolio size. These calculators utilize initial investment amounts and time until retirement to compute monthly investment requirements.
3. Seek financial guidance:
Consulting a financial advisor prior to formulating an investment strategy is advisable. Engaging with multiple financial experts aids in selecting optimal investment funds tailored to your objectives.
What are the benefits of investing with SIP?
SIP investing may provide several benefits:
- Simplicity - SIP investing eliminates the need for active management of investments. Commence investing with as little as ₹100 per month.
- You don't need to time the market with a systematic investment plan (SIP). If the market is up, you purchase less. In a bear market, you purchase more.
- Compound interest lets you generate substantial profits over time, helping you attain your objectives.
Looking for an SIP Calculator? Axis Bank's SIP Calculator offers the most features. Due to its various features and user-friendly design, it offers exact and informed investment planning details.
Also Read: How to build a strong Mutual Fund portfolio
Conclusion
Investment programs like SIPs may help you accomplish your financial objectives easily. These methods will help you start making money if you follow them. A concentrated systematic investment plan (SIP) may help you remain on track.
This applies to retirement, education, and rainy-day savings. Systematic investment plans, or SIPs, use compounding income and the ability to invest modest sums regularly to grow your wealth.
Remember to monitor your investments and make adjustments to ensure they assist you in attaining your objectives. Start your SIP now to take responsibility for your finances.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
Mutual Fund investments are subject to market risk, read all scheme related documents carefully. Axis Bank Ltd is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Purchase of Mutual Funds by Axis Bank’s customer is purely voluntary and not linked to availment of any other facility from the Bank. T&C apply.
