Deciding to invest is one thing, getting started is another. If you have understood the basics and are ready to start investing, here is a simple, practical guide on how to start sip investment the right way.
Before You Start: Establish the Foundation
Investing in SIP: Some groundwork before you open an investment account.
1. Establish Your Financial Goal
Ask yourself why you are investing. Is it for retirement, a child’s education, a future home, travel, or just general long-term wealth creation? Your goal will help us determine how long you need to invest your money for, and what type of scheme may be right for you.
2. Define Your Investment Timeline
Think about when you will need the money. The longer the horizon, the more you can look at schemes with higher market-linked movement, and the shorter the horizon, the more conservative options you have to look at.
Steps to start SIP investment
Here is the workable process of how to start SIP investment once you have clarity about your goal and time horizon:
● Choose a mutual fund scheme that suits your goal, risk comfort and investment horizon. Review the investment objective, riskometer, and the approach to the portfolio.
● Please read the scheme documents, including the Scheme Information Document and Key Information Memorandum, before making any decision.
● Please complete your KYC ( Know Your Customer) verification as it is a mandate to invest in Mutual Funds.
● Set your SIP amount and frequency, which could be daily, weekly, monthly or quarterly as per the scheme.
● Set up an auto-debit mandate with your bank authorizing the SIP amount to be deducted on the date of your choice.
● Periodically review your SIP configuration and monitor it as your requirements change.
How Much Can You Afford to Keep?
A common mistake when learning how to start SIP investment is choosing an amount that is too ambitious. It’s also wise to make sure you’re contributing an amount that fits comfortably within your monthly budget and doesn’t interfere with your necessary expenses or short-term financial needs. You can always increase your investment later, manually or through a Step-Up SIP facility, where available.
Things to Watch Out for Before You Start
Before you decide how to start SIP investment, here are a few things to keep in mind: SIP returns are market-related returns and not fixed returns, and there is no such guaranty.
The scheme you choose is as important as the SIP itself. Just because you are investing through SIP, an unsuitable scheme will not automatically become suitable.
Don’t review your SIP every time the market moves. Do it periodically, especially when your income, goals or risk comfort changes.
Should you require some help?
If you’re uncertain about the best category or asset allocation for you, or have immediate liquidity needs or high-cost debt, you might want to rethink your timeline or speak to a financial advisor before you get started.
How To Do Everything
Get to know SIP Types, Advantages and Factors to select a scheme in our complete SIP Guide.
First Plan Your Numbers
The SIP Calculator provides you with the possible outcomes for different SIP amounts and periods before you actually start investing.
Final Thoughts
Starting a SIP is simple with some clear steps from setting a goal to registering your mandate. Tata Mutual Fund brings to you an in-depth manual on how to start SIP investment so that you can start your journey with confidence.
Mutual fund investments are subject to market risk; read all prospectuses carefully. Read all scheme-related documents carefully