What is a SIP plan, and how to open a SIP account
SIP stands for Systematic Investment Plan. A SIP plan is a systematic approach in terms of saving money through investments. A SIP plan is a plan that will allow one to invest their money into SIP plan mutual funds so that a large sum can be accrued after a long-term for the purpose of fulfilment of your needs in the future years to come. With a SIP plan, you are able to invest your money which is pre – determined into the mutual funds at regular intervals like quarterly, monthly, weekly, etc. You can choose the payment mode in accordance with your convenience. A small amount of amount is invested in a SIP plan in the market and invested into mutual funds. The deposit has to be made again and again at certain intervals, regularly so that a larger amount can be built. One will invest into the systematic investment plan in accordance with their monetary needs that they need to achieve by saving their money by investing in the SIP plan. You have the freedom to choose the interval periods that you want to invest through.
Once you start investing into the systematic investment plan, the total amount of your investment money that you need to pay for that particular month or year will be automatically debited from your account which you had registered with and invested into the SIP plan. This money will be invested into mutual fund schemes. After that, the investor is given a certain number of units which are based on the market rate; this is called the net asset value or the NAV. 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. A SIP plan can be more useful if the Systematic Investment Plan with a purpose of long – term investment plans. The returns from the investments that you make into SIP are pretty good because of the rupee – cost averaging.
- It is very easy in terms of regular investments. There is no problem or a scare 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.
- The SIP is very flexible in terms of the investor having the control over whether they want to continue or discontinue the Systematic Investment Plan (SIP), at any time.
- SIP allows you to save regular and continuous savings. You are committed to saving at regular intervals so that a good and huge amount can be accrued in a time period so that it can be used later.
- The investor has great control over the SIP plan – Systematic Investment Plan that they invest in as they are the ones who get to decide if they want to decrease or increase the amount of money of the SIP investment.
Opening a SIP account: Online
- KYC stands for Know Your Customer. It is the first step that has to be followed online for opening a SIP account. The customer will be asked their information in detail. KYC is a compulsory step to be done before you invest into mutual funds. You will be asked personal information like your name, cellular phone number, address, date of birth, etc. This can be done on any KYC registration agencies.
- Now, upload your documents for verification. The KYC will require you to scan and then upload your PAN – permanent account number card.
- Now, you will be verified through a video call. This is done for IPV: In – Person Verification online. The fund company will ask you to select a suitable time and connect with them through a video call. During this video call, you might be asked to provide them a view of your PAN card and address proof, so keep them handy.
- Go to the fund website and open the registration link to make a new account.
- Now, enter your bank details.
- Then, verify your account through an OTP that you will receive.
- After creating your account, log in and make selections regarding the following details:
- SIP date
- Mutual Fund scheme
- Your SIP account is open and you have started your fund!
KYC: Aadhar Card
An Aadhar card has managed to make a lot of processes easier. If you want to get your KYC done easily online, doing it by linking your Aadhar card is a simple option. Enter your Aadhar card number into your KYC registration website and authenticate it with a one – time password – OTP. The OTP will be sent by UIDIA – Unique Identification Authority of India. Doing this will fill up all the details on your KYC 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). Another great advantage of linking your Aadhar card to your KYC is that this process eliminates the need for the IPV which is the In – Personal Verification through a video call. There is also a small con to this process that it will not allow you to invest a sum of more than INR 50,000 into your SIP – Systematic Investment Plan mutual funds in case you have not submitted your PAN card details, which is only fair. Not more than INR 50,000 can be invested into the mutual funds in one financial year. You can start investing more than the sum of INR 50,000 immediately after you have submitted your PAN card details to the KYC.
Invest into a SIP plan and get good returns which have been accrued over a long – period of time. It is very easy to open a SIP as you just need to follow a few easy steps to do the same.