Are you ready to start your journey to achieve financial success through SIP investments? If so, you must open a SIP account to invest in Mutual funds. Discover the different ways to open a SIP account in India.
But wait! Before you open a SIP Account, it is essential to have a clear understanding of your financial goals and risk appetite. Also, you should research and find the best mutual fund based on your goals and avoid common mistakes.
What is a SIP Account?
A SIP account is an investment account to invest money in mutual funds on a regular basis. SIP stands for Systematic Investment Plan, which means a SIP account provides a systematic way to invest a fixed amount of money at regular intervals, be it weekly, monthly or quarterly.
One of the best advantages of a SIP account is that it allows you to benefit from the power of compounding. In other words, when you invest money and earn returns, those returns also start earning returns. This cycle continues resulting in significant growth of your investment.
Ways To Open A SIP Account
1. Open Online
There are several options to open a SIP account online. Here are some most popular ways:
A. AMC [Asset Management Company] Website
You can visit the website of the mutual fund company you wish to invest in and open a SIP account by following the steps provided on the website. We will discuss those steps later in the post.
B. AMC Mobile App
Nowadays, most mutual fund companies offer mobile apps that you can download and open a SIP account. Opening an account through mobile apps is more convenient and time-saving than that through a website.
C. Online Mutual fund Platforms
Online mutual fund platforms are specifically designed for buying and selling mutual funds. They offer a wide range of mutual funds, lower expense ratios and sometimes no transaction fees for mutual fund investments.
They also offer additional features like research tools, portfolio tracking, goal-based investments, tax-saving mutual funds and investment advice. Some mutual platforms in India are Groww, Zerodha Coin, ET Money etc.
D. Discount Brokers
Discount brokers are online stockbrokers that offer a wide range of investment options like stocks, bonds, mutual funds and more. They charge a fee for every transaction including mutual fund investments.
Also, they provide limited mutual fund options. They may not provide additional features as mutual fund platforms. Some discount brokers in India are Upstox, Zerodha, 5Paisa etc.
Advantages & Disadvantages of Online Account Opening
|1. Convenient||1. Technical Issues|
|2. Time-Saving||2. Security Concerns|
|3. Easy Access||3. Lack of Personal Interaction|
|4. Low Cost||4. Limited Options|
2. Open Offline
Although most people open SIP accounts online there are some ways to do it offline. Such as:
A. Visiting a Mutual Fund Office
You can visit the office of the mutual fund company in person and fill out the necessary paperwork to open a SIP account.
B. Visiting A distributor or Advisor
You can also visit a mutual fund distributor or advisor who will help you with the required paperwork and also help you choose a suitable mutual fund based on your investment goals, time horizon and risk appetite.
Advantages & Disadvantages of Offline Account Opening
|1. Personal Interaction||1. Less Convenient|
|2. Paper-Based Documentation||2. Time Consuming|
|3. Flexibility||3. Higher Costs|
|4. Familiarity||4. Limited Access|
Steps To Open A SIP Account Online
- Choose an online platform that offers mutual fund investments.
- Register on the platform by providing personal and financial details.
- Once you are registered, choose the mutual fund of your choice and provide investment details such as SIP amount and frequency of investment.
- Upload your KYC documents (Proof of Identity, Proof of Address, Pan Card, Passport Size Photo and Bank details).
- As soon as your KYC is verified, your SIP account will be opened enabling you to invest in the mutual fund of your choice.
Steps To Open A SIP Account Offline
- Visit the nearest office of the mutual fund company, an advisor or a mutual fund distributor.
- In the case of a mutual fund company, fill up the mutual fund application and provide the necessary investment details such as SIP amount and frequency.
- Submit the application along with the necessary KYC documents.
- Once your KYC is verified, you are ready to go.
- In the case of a distributor or advisor, provide them with investment details and they will do the required steps for you.
Do I need Demat Account For SIP Investment?
No, you don’t need a Demat account for a SIP investment account. A Demat account is used for holding your securities in electronic form. However, when you invest in mutual funds through a SIP, you are not actually buying or selling securities.
What documents are needed for KYC?
Here are the documents needed for KYC:
1. Proof of Identity (PoI) – Aadhaar Card, Passport, Voter ID card, Driving License, etc.
2. Proof of Address (PoA) – Aadhaar Card, Passport, Voter ID card, Driving License, Utility Bill, etc.
3. PAN (Permanent Account Number) card
4. Recent passport-size photograph
5. Bank account details (for bank mandate)
Can I invest in multiple SIPs at the same time?
Yes, you can invest in multiple SIPs at the same time. It is important to diversify your portfolio and choose mutual funds based on your financial goals and risk appetite.
How can I track the performance of my SIP investments?
You can track the performance of your SIP investments through the mutual fund company’s website or online platform. They usually provide regular updates and statements to track the progress of your investments.