One of the most asked questions on this blog and my YouTube channel is How to Invest in SIP? The process to start SIP is very simple. For example, if we consider SBI mutual fund, we first register on the SBI mutual fund official website, we create mutual fund folio after login into the website, the “new investment” option helps you to start SIP in SBI mutual funds, we provide various details such as SIP frequency, scheme details (or mutual fund selection), start date and end date. After this we are provided with URN (unique registration number) which we register on our bank’s internet banking website, and we are done with confirmation message!
Simple right? Let’s see all these steps below in detail.
Below is the video showing all steps to start SIP in mutual fund online
How to Invest in SIP Online Video
In above video, I have demonstrated all steps to start SIP in SBI blue chip direct fund (growth plan) which is one of the popular SBI funds with current AUM = Rs. 30,679.47 crore.
You can also go through below steps to start SIP in SBI or any other AMC (Asset Management Company).
Steps to Invest or open SIP online in SBI
- Go to SBI Mutual Fund website. Below is the page that will be displayed
2. Register on SBI Mutual Fund website by providing PAN, email ID, mobile number and password to be used
3. Login using your email ID and password
4. Click on “New Investment”
5. Select folio number and provide other SIP details
6. Submit and check confirmation details
7. Register URN (unique registration number) on bank’s internet banking website
So above are all the steps you need to perform to start SIP in SBI mutual fund. Similar process can be followed to invest in SIP via any other mutual fund website and internet banking based on your bank.
Now how much returns you can expect from SIP in mutual fund? To be honest, nobody can accurately predict the future returns of SIP but we can only expect the returns to be in a range of 8%-12%. Historically, we have also seen 15% to 20% returns in some best mutual funds if you select them based on your analysis.
Best Mutual Funds to Invest in SIP
Above is the video showing some best mutual funds to invest via SIP. You can do your own analysis of stocks present in mutual fund, fund manager experience and many other factors while selecting a mutual fund to invest via SIP.
How to Calculate SIP Returns
You can easily calculate SIP returns using the SIP calculator here.
Below is the result of using the SIP calculator:
As seen above, you need to provide SIP amount, expected returns in percentage annually, tenure in years or months and you will get the total deposits made, profits and maturity amount you will receive at the end of the SIP tenure.
Also, you can use the excel calculator provided in above calculator to calculate SIP returns.
ALSO READ: SIP Returns Calculation in Excel
Above article also explains you what is SIP, what is NAV in mutual fund and how to use NAV of mutual fund to calculate SIP returns, so it’s worth reading!
Benefits of SIP:
- Rupee Cost Averaging: This is the term derived from dollar cost averaging but let’s understand this in terms of rupee! The fact that SIP invests in mutual funds regularly, helps you to buy less mutual funds units when market goes up (price goes up) and more mutual funds units when market goes down (price goes down). We will see this in examples below.
- Lowering risk: As compared to lump sum investing where you invest entire amount in one go after seeing a small drop in market, your SIPs help you to balance your investment value by seeing the ups and downs of market while helping you invest regularly. This lowers the risk in SIP.
- Mental Strength: In SIP you do not pay huge amount up front like lump sum investing. You always pay a fraction of amount which you can afford to invest and reap benefits over long term.
- Achieving goals: You must have heard about – “Slow and steady wins the race“. It’s not about the sprints that you take but it’s about the marathon that you win slowly and with patience. SIP helps in achieving your long term goals by keeping aside some amount of money every month.
For how long is SIP Time period
You can keep the SIP minimum for 6 months and maximum for ever. There is no upper limit on which you have to stop SIP, it completely depends on you. Also, you can redeem the SIP units anytime you want, provided you have read about exit load conditions of mutual fund.
WHEN YOUR SIP GETS MATURED
It is important to mention here that you can sell your mutual fund units when doing SIP, anytime you want. There is no SIP maturity defined. There is no compulsion to keep your SIP investments for 1 year or 5 years or any specific period. You are free to buy and sell anytime you want.
Conclusion
SIP or Systematic Investment Plan is one of the best tools to achieve your financial goals. Slowly and steadily you move towards your goal every month.
Also you can increase the SIP amount every year with the increase in your income with the help of job promotion or bonus. This increase in SIP is called Step up SIP which helps you to achieve your financial goals before time. And it is also important to map your SIP with different goals such as buying a new house or child marriage, etc.
Some more Reading
- SIP vs Lump sum Investing Which is Better?
- How Compounding works in Mutual Fund SIP
- Income Tax on SIP Redemption
Some more SIP videos
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Income Tax Calculator App – FinCalC
For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.
What you can do with this mobile App?
- Calculate Income Tax for new FY 2024-25 and previous FY 2023-24
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