Let us explain what is SIP - Systematic Investment Plan
A Systematic Investment Plan is a plan that money is invested into in order to save money by getting returns. The money is invested into mutual funds. A SIP plan is basically a systematic approach in terms of saving money. It is a plan that allows one to invest their money into mutual funds in order to accrue large sum of money to fulfill your needs in the future years to come.
A predetermined amount of money by the investor is invested into the SIP mutual funds. There are regular intervals in which the investments have to be paid by the investors to be put into the SIP mutual funds. These regular intervals can be chosen by the investor itself. The regular intervals can be either quarter - yearly, monthly or weekly. The amount to be invested into the SIP plan is decided by the investor according to their monetary potential and their risk appetite or risk level. The investor chooses an amount to invest which will help them reach their goal of accruement which might be the primary purpose of investing in the SIP plan. The investor has the power to choose the interval periods that you want to invest through.
Auto - Debit
Once you start investing into the systematic investment plan, the amount of your investment money can be automatically debited from your account which you had registered with and invested into the SIP mutual fund. You can get it automatically debited by registering your bank with it. The debited money is invested into a mutual fund scheme for SIP. There is absolutely no problem or the risk of the lapse of the SIP plan if you forget to make the payments as you can give your bank an instruction to auto-debit the investment amount from your account during every interval that the payments have to be made.
Net Asset Value
After the money is invested into the SIP, the investor is given a certain number of units which are based on the market rate which is the NAV or the net asset value. It works in a way that each time your money goes into the investment amount, more units of the scheme will be added to your SIP account. The more units you have, the higher the chances of getting good returns on the SIP mutual funds.
The Systematic investment plan is extremely flexible for the investor. The investor has immense control over the SIP plan as they can decide whether they want to continue or discontinue the Systematic Investment Plan (SIP), at any time. Even if they have taken up the SIP plan for a long-term period, if they feel like it is not working out for them, they can discontinue the SIP plan at any time in the middle of the plan.
The investor also has great control over their Systematic investment plan that they invest into because they are the ones who have the power to decide if they want to increase or decrease the amount of money of the SIP - Systematic investment plan.
A SIP plan is a long-term plan. So, it gives you a chance to have regular and continuous savings. A good amount of money can be accrued in a long period of time. Investments are usually put into SIP so that a huge amount of money can be received as a return for fulfilling any future requirements or goals that people have. SIP allows you to save regular and continuous savings.
Steps to start a SIP
- KYC yourself - Register yourself as a “know your customer” complaint
- Finding the fund - Find out what type of fund you want to invest in and how you want the funds to be invested into the SIP
- Amount of investment - Figure out how much money you will invest into the fund by figuring out how much you want to accrue and how much investment it will take to reach that particular monetary goal.
- When to pay - There are regular intervals at which you have to make the investment payments. You can select one out of monthly, yearly or quarter - yearly.
- Submission - Submit your SIP form so that your money can be invested into the funds.
KYC with Aadhar Card
There is a super simple step to complete your KYC process, you can just link your Aadhar card with it and all your details will be taken from your Aadhar card information and put into your KYC account.
To do this, you need to enter your Aadhar card number into your KYC registration website and then it will be authenticated it with a one - time password - OTP. The OTP will be sent by UIDIA - Unique Identification Authority of India. By doing this, your Aadhar card information will fill up all the details on your KYC (only the information needed) form by taking information from your Aadhar card and you will not need to go through the hassle of filling up each and every small detail on the form(s). The verification through the video call is eliminated as this process has already verified you. But, in case you have not filled up the details about your PAN card, then the investments that you can make cannot be above the amount of INR 50,000. Fill your PAN card details and then you can start investing more than the limit of INR 50,000.
Now that we are finished with the process of ‘explain what is SIP’ to you, you can invest in systematic investment plans and get a good return after a long - term.