Opening a SIP Account: A Step-by-Step Guide

Investing has always been quite intimidating for new people. A lot of them fear losing money or do not get the starting point holding them back from making investments. However, with Systematic Investment Plan, investing has become easier and quite accessible to anyone, be it an experienced investor or a newbie. 

This article will help you open a new SIP account and start your journey towards achieving your financial goals by investing. 

 

What is an SIP Account?

Before diving deep into the steps to open an SIP account, it is essential to understand “What is SIP account” and how it works. A SIP account is a specialised investment account that can be used by potential investors to invest in mutual funds in a disciplined and systematic manner. 

Here, investors can contribute smaller fixed amounts at regular intervals, like a month or quarter, instead of a lump-sum investment. This helps investors to automate investing in chosen mutual fund schemes. 

How to Open an SIP Account?

Opening a SIP account is a relatively easy process for anyone by just following some straightforward steps.

Step 1: Gather all the KYC documents in digital format that will be used to validate your identity.

Step 2: Create an Account in the mutual fund SIP application by entering your details, like name, email, address, profession, etc, in the online application form and submit your KYC documents.

Step 3: After filling up out the application form, wait for some time to get the KYC verification Process completed. It might take some time but once done, the account holder will be able ready to start investing via SIPs.

Overall, it is quite a straightforward process that can be easily completed from your home, either through a website or application. However, it is essential to provide all the documents correctly to prevent any delay in the process. 

KYC documents to Open an SIP Account?

For opening a SIP account, a user need to first complete his KYC process. For KYC, an investor needs to have his passport-size photograph, PAN Card and any other officially valid document like Passport, Aadhar, Voter's Identity Card issued by Election Commission of India, etc., handy. Subsequently, bank account details would be required to set up the automatic deductions for the SIP amount. Investors should note that utility bills will note be accepted as KYC documents for opening an SIP Account.

Register for a SIP

• Once the KYC process is done for the Online SIP account, you can start investing. To start the process, the investor needs to register for SIP by following the steps given below.
• Select the Mutual fund scheme based on the investment goals and risk appetite. This can be done by doing research about the different schemes available for investing.
• Specify the details of the SIP investment, such as the Mutual fund scheme, Frequency of contributions (daily/weekly/monthly/quarterly/halfyearly/yearly), and the investment amount.
• Set up the Auto-Debit Mandate to allow mutual fund houses to debit the SIP investment amount at a certain point in time directly from the bank account. You can enable this by filling up an auto-debit mandate form.
• Carefully review all the details and, once satisfied, submit the form.

Choose the Right Plan for yourself

The investor must choose the right SIP plan to help them achieve their financial goals. A few of the important factors one should consider are risk appetite, investment horizon, and investment goals. Evaluation of different mutual fund schemes based on their investment strategy, expense ratio, and historical performance would help in choosing the right plan.

Choose the Amount That You Want to Invest

While opting for the right SIP plan, determining the correct amount to invest is the next step in the process. Based on the financial situation, one can set an amount in which he/she can invest without straining the budget. 

It is recommended to choose the amount which one can invest consistently for a longer duration to gain the benefit of compounding and achieve financial goals. 

Choose the Date For your SIP

Further, choose the date that aligns with your cash flow and ensure that the required amount is available in the bank account on the date set for debit of the SIP amount. A lot of investors prefer to choose the date when they receive their salary or just after that when they have a surplus amount. 

Conclusion

In conclusion, opening a SIP account is a simple process. Following the outlined steps, like completing KYC and choosing the right amount and the right date, can help investors start making investments.

SIP provides a way to grow wealth over time by leveraging the power of compounding and managing the risks of market volatility. With proper planning and regular analysis, investors can achieve their financial goals.  You can use our sip calculator online tool to determine how much amount you should start with.

 

FAQ's

1. What is a SIP  account?

A SIP or systematic investment plan account allows investors to make investments in mutual fund schemes.

2. Do I need a Demat account for SIP?

No, SIP investment does not require a demat account since mutual funds hold the shares of stocks or other financial instruments and manage them directly. 

3. How do I create a SIP Account?

To create a SIP account, it is necessary to complete the KYC process, fill out the online application form, register for SIP by choosing the right amount and date for investment, and finally set up the auto-debit mandates for investing. 

 

Disclaimers 

SIP  investments does not guarantee of any profit/loss in an upward/declining market. Kotak Mahindra Asset Management Company Limited/Kotak Mutual Fund is not guaranteeing or promising any returns/future performances. 

Investors may consult their Financial Advisors and/or Tax advisors before making any investment decision. 

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY