How to start an SIP Online

Systematic Investment Plans (SIPs) have become extremely popular among mutual fund investors. Mutual fund experts believe that SIPs are the best way to invest periodically in the market. However, a sizeable number of individuals are still confused about SIPs. Many of them do not know how really an SIP works. Several individuals do not know how to start an SIP. 

An SIP is a simple tool that helps you to invest regularly in mutual funds. You can start an SIP with a frequency of your choice: daily, weekly, monthly, quarterly, among others. Most investment advisors ask investors to invest in equity mutual funds only through SIPs as it will help them to average their purchase cost and maximize returns. The most important contribution of SIPs is the financial discipline it imparts on investors’ life as they compel investors to invest regularly irrespective of the market conditions. 

Here are three easy steps in which you can start an SIP in a mutual fund scheme. 

Step 1: Get necessary documents 

You only need a handful of basic documents to start an SIP online: a PAN card, an address proof (driving licence/bank statement/utility bill), a passport size photograph and a cheque book. The cheque book will come handy to provide your bank details. Having an Aadhar number is not mandatory but it would simplify the process. Needless to say since the whole procedure will be completed online, you will need a computer with an internet connection. 

Step 2: Become a KYC compliant 

It is mandatory to comply with the Know Your Customer (KYC) requirements for investing in mutual funds. You simply should provide basic information like name, date of birth, mobile number, address, etc. You just have to go through the process only once, even if you are investing in multiple mutual fund schemes with different fund houses. 

Visit the website of one such mutual fund house and start the process. You can also visit the website of registrars and transfer agents of mutual funds like CAMS and Karvy. 

You should fill in basic information and upload a soft copy of your PAN and address proof to support the details filled in the first step. Finally, a video call will be scheduled to confirm your physical presence. 

You also have the option to complete the eKYC procedure using your Aadhar number. This will simplify the process as it pre-populates the form with your basic information and eliminates the need of a video call. However, it imposes a statutory investment limit of Rs 50,000 per annum per fund house. 

Step 3: Start the SIP online 

Once you are KYC compliant, you can visit the the website of the fund house you want to invest. Search for a ‘Register Now’ or a ‘New Investor’ link. It will prompt you to fill a simple form with your basic details, and to choose a username and password for transacting online. It will also ask you to enter your bank account details to set up a monthly debit and to process the redemption proceeds when you redeem. 

Simply log in with the chosen username, password and select the scheme you wish to invest in. You can choose any date for your monthly SIPs according to your convenience. The SIP will start after a gap of 30-40 days.