Indian mutual fund houses offer a tool for investing called a Systematic Investment Plan.A SIP allows you to invest a small amount of money into a mutual fund on a regular basis.Your deposits can be quarterly, monthly, or weekly.You can monitor the fund's performance and adjust the amount of your investment if necessary.Carefully choose the funds included in your SIP to minimize your investment risks.
Step 1: Evaluate the mutual funds in India.
You can find mutual funds and fund houses online.If you have friends or family who already have a SIP, you might ask them what funds they recommend.A financial or investment advisor can give you advice.Evaluate the website that ranks mutual funds or gives advice on which funds are the best.It's important that the website is objectively evaluating the funds and isn't content marketing for a fund house.
Step 2: There is a fund house with a good reputation.
The fund manager is responsible for the fund's performance.A fund house with a track record of consistent performance is a good choice.Reliance, HDFC, and State Bank of India are popular fund houses that are well-known throughout the country.The team managing the funds should have experience dealing with the ups and downs of the market.During high and low points in the economy, look at the performance of funds managed by that fund house.Rather than funds that seem vulnerable to market movement, look for consistent, even performance.Rather than relying on a star manager to oversee funds, avoid funds that rely on an experienced team.If one person suddenly leaves, the fund could lose money.
Step 3: Look for funds with at least 500 million dollars in assets.
500 Crores is a good benchmark for a large asset size fund.There are funds with less assets that can be riskier.If you're just starting out, stick to large funds.The fund house's website has information about the assets included in the fund.Larger funds are usually established for a longer period of time.If you choose a fund, make sure it has been around for at least 5 years.You don't have a lot of performance to evaluate newer funds.
Step 4: Funds should be compared to their benchmark indexes.
A fund's individual performance doesn't tell you a lot about whether that fund is a good investment or not.Look at the fund's individual performance and compare it to similar funds.The benchmark index is a good place to start.If the fund consistently performs better than the benchmark index, it's a good investment.The performance of the fund can be compared to other funds.Make sure you compare funds with similar assets.It won't tell you anything if you compare a mid-cap fund to a large- cap fund.
Step 5: You can choose 3 or 4 funds.
You should have funds at the top of your list after some research.Diversifying your investments is important.When starting a SIP, you should stick to just 3 or 4 funds with a strong history.You can balance your investments with a combination of funds.Multi-cap funds have assets in the same fund and include both large- and mid- cap assets.
Step 6: Information about your identity is required to fill out the KYC form.
KYC forms are required for the fund house you want to use.You can get this form from the fund house's website.The form asks for basic information about you, such as your name, address, and phone number.You may be able to fill out and submit the form online, or you may have to take it to a branch of the fund house.
Step 7: Proof of identity and residence documents are required.
You will need to provide proof of address, a personal checkbook, and a passport-sized photograph.A fund house representative will look at the documents.You can show proof of address by showing your driver's license, utility bill, or bank statement.
Step 8: You have to complete in-person verification of your identity.
You can get your identity documents and proof of residence at the fund house when you fill out your KYC form.A fund house agent will look over your documents.The fund house's files will be certified by the same agent.You won't be able to open an account until this certification form is included.
Step 9: If required, include additional information and documentation.
Proof of your income and details about your job can be requested by some fund houses.You have to provide any additional information that the fund house requires for opening an account.If you want to fulfill the requirement for additional information, you can submit a copy of your tax return or letter from your employer.A list of acceptable documents will likely be given to you by your broker or financial advisor.
Step 10: To link your SIP, contact the relationship manager at your bank.
If you have your SIP set up with your bank, your payments can be withdrawn automatically.The relationship manager at your bank can help if you're not sure how to do it.There is information on how to link your account to a SIP on the bank's website.
Step 11: Determine how much you want to save.
You can pay installments into your SIP on a quarterly, monthly, or weekly basis.Take your budget and expenses into account to figure out how much you can invest.If necessary, you can withdraw funds from a SIP.Payments can be paused if things get tight.You don't have to use these options if you choose a smaller amount.If you want to make more installments, they should be smaller.You can go with a larger amount if you plan to make fewer installments.
Step 12: You can complete an application with the funds house.
You can download the application from the fund house's website.You may be able to submit it online.Information about you and your SIP preferences are required by the application.Let the fund house know when you want your SIP to start, the amount of your installments, and how often you would like to pay them.Information about your financial or investment history may be asked by the fund house.
Step 13: Provide your funds house with your NACH mandate.
In addition to the standard application, you must also give your funds house a NACH mandate from the NCPI.The relationship manager at your bank will help you finish it.SIP payments can be automatically deducted from your bank account if you choose.If an automated payment doesn't go through because there is not enough money in your bank account, you will not be punished.You won't miss that part of the account, it's still open.