A Comprehensive Guide to SIP Investment by InBest

Systematic Investment Plans (SIP) are often the simplest route to entering mutual fund investing because they are quite flexible, cost-effective and low-risk vehicles that work with low-cost investments and help set a more disciplined investment goal. 


This article talks about the important factors and steps to get you started on your SIP investing journey. For more personalised guidance, feel free to consult with us at InBest?

We are a reputed investment broker in Kolkata, where we widely work with beginners, helping them make conscious and profitable decisions owing to SIPs, mutual funds, and other equity investments.

What is SIP and How Does It Work? 


Mutual Funds offer the vehicle of SIP to reach out to investors who cannot invest lump sum amounts, so it allows them to put their money in small amounts over a periodic frequency, which could be annual, quarterly, or monthly. 


One of the key benefits of SIP is that it allows incremental wealth creation for those with more expendable income- which is the money they still have after paying taxes, savings, and responsibilities - available to be spent or saved as one wishes. The amount of units you buy is determined by the mutual fund's Net Asset Value (NAV) at the time of purchase.

When NAVs are low, you gain more units, and when it’s high, you get fewer units. This strategy is known as rupee cost averaging and helps minimise the impact of market fluctuations.

SIPs also harness the power of compounding. The returns generated from one's investments earn their returns over time, compounding their earnings as long as they stay invested.


How to Invest in SIP: A Step-by-Step Guide!


Step 1 – Evaluate Risk Appetite and Investment Objectives

Before initiating your investment, grasp a clear understanding of your risk tolerance. Generally, age and financial commitments impact risk tolerance—older age and higher obligations correlate with lower tolerance. However, if you seek elevated returns, you must expand your risk appetite.

Once you've gauged your risk tolerance, dig into comprehending your investment motives.

Investments are instrumental in realizing financial aspirations, so, recognize the purpose of investment first.

Step 2 – Choose a Mutual Fund for your Investment

Amid a number of options encompassing ULIP plan funds and mutual fund schemes, your selection should mirror your risk inclination and personal financial aspirations tied to SIP investments.

While making fund choices, the fund's historical performance over recent years should be considered.

Once you've determined the mutual fund company aligning with your preferences, the subsequent steps entail:

Once you choose a mutual fund company, follow these procedures:

  1. Complete the application form.
  2. Submit a cheque representing your monthly SIP amount (for offline mode) or complete the ECS form (for online mode).
  3. Present a cancelled cheque.
  4. Furnish your residential proof.
  5. Accomplish the KYC form.


Step 3 - Choose Your SIP Date

In the framework of the SIP, where funds are debited from your bank account automatically, choosing a suitable payment date becomes imperative. This decision is based on your convenience. Moreover, you can opt for multiple dates for SIP instalments within a month.

Most mutual fund companies provide a range of options for investors to choose from. This enables you to align your SIP contributions with your financial schedule.


Step 4 - Determine Your SIP Tenure

Choosing mutual fund investment via a systematic investment plan is the best and most user-friendly approach to accomplish your financial objectives.

To ascertain the maturity amount required to attain your forthcoming financial aspirations, you can leverage the SIP calculator. This tool empowers you to make knowledgeable decisions concerning the duration of your SIP investment.


Step 5 - Choose Offline or Online SIP Mode

As stated earlier, SIPs offer both offline and online avenues for investment. Opting for the online route brings a notable advantage: it offers automatic debit of funds into your chosen ULIP plan or mutual funds. This eliminates the need for manual money transfers to your SIP account.


Step 6 - Stay Invested Throughout

SIPs offer a better approach to cultivating wealth via long-term investments. Their structure frees you from the need to monitor daily ULIP funds' performance or the day-to-day fluctuations of mutual fund markets. Embrace peace of mind throughout your investment period.


Step 7 - Diversify Your SIP Portfolio

Instead of spreading assets across multiple ULIP plans and mutual fund schemes, it’s best to concentrate on three to four consistently high-performing funds.

Start with constructing a well-diversified, balanced portfolio to build a solid foundation for your investment journey. A smart method involves combining large-cap, small- and mid-cap, and multi-cap funds to build a strong portfolio.


Contact Inbest for Expert Guidance 


At this point, you ought to have a thorough understanding of the SIP concept. If you need any further support, please do not hesitate to contact Inbest. We are well-equipped to assist you with all areas of SIP, mutual funds, and their intricacies as industry pioneer.  Please contact us if you require expert assistance or insight.

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