How to start SIP online in mutual fund

How to start SIP online in mutual fund? 

October 23, 2023
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Are SIP investments a category of mutual fund investments or a way to invest in mutual funds? Know answers to this question and many more in this article where we enlist five steps that every investor must follow to start an SIP online in India in 2023. 

What is an SIP investment?

A systematic investment plan (SIP) is a mode of investment. Investors can choose one of two modes while investing in a mutual fund scheme – lump sum or SIP. While investing in a mutual fund via a lump sum, the investor must invest all of their capital in one go. On the other hand, in an SIP investment, a fixed amount needs to be invested at regular intervals (monthly, bi-monthly, or quarterly). SIP investments help investors develop the discipline of regular investing over a long period.  

How to invest in a fund via SIP online? 

Here is a five-step checklist that you can follow to invest in a mutual fund via SIP online: 

  1. Identify a financial goal

Before investing in a mutual fund, you must know your financial goal. Your goal could be financing your child’s higher education, building your retirement fund, or even purchasing a car. Having a fixed goal before beginning your investment can help you assess your investments annually and alter them if you feel the need. 

  1. Research online for mutual funds that can help you meet your goals

While researching mutual funds online, you must analyse whether your investment aligns with your financial goal and accordingly opt for an investment. For example, if you wish to build a retirement corpus in a few decades’ time, you must analyse ‘retirement mutual funds’ or ‘pension funds’ online and analyse their performance in the last 2-3 years. Secondly, while selecting a mutual fund, you must allocate your assets strategically to avoid high risk and maintain a steady flow of returns. 

  1. Analyse your risk-taking capacity

If you are averse to taking financial risks, you must opt for a mutual fund that poses a lesser risk to investors. Bear in mind that returns and risks and related and a healthy mix of high and low-risk investments can go a long way in growing your wealth over time. 

  1. Use a mutual funds SIP calculator

Next, you must use a mutual fund SIP calculator. An SIP calculator can help you plan your investment in advance by defining the value of your financial goal. ICICI Prudential AMC’s  SIP calculator, for example, helps customers calculate the exact value of their SIP contributions by accepting the details of their goal amount as input. 

  1. While investing, choose the SIP option

When you finally decide to invest your capital after analysing these details, you must choose the ‘online SIP’ option while investing. Most online investment websites and apps offer this option to customers. You can start an SIP investment with an investment amount as low as ₹500 per month. 

Why should you invest in SIP?

Here are the advantages of investing in a systematic investment plan:

  • Regular investment develops a discipline in the investor that is key to growing wealth over the long term. 
  • The value of every unit that you own averages over the long term provided the investor invests a fixed amount regularly. This phenomenon, called “rupee-cost averaging,” is another advantage of investing via SIPs. 
  • SIPs leverage the power of compounding to grow an investor’s capital over the long term. 

Before investing in a mutual fund’s SIP online, we recommend you follow the five steps mentioned in this article and analyse the fund’s performance in the past few years. 

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