What is iSIP? How to Invest in iSIP?

What is iSIP?

The internet-based SIP also called iSIP, is a completely paperless way of setting up an SIP. Systematic Investment Plan popularly called SIP allows you to invest small sums of money regularly, say once each day, month or fortnight in a mutual fund. SIP is not a mutual fund. It’s just a way of investing in mutual funds.

The SIP works just like a recurring deposit. You invest small amounts regularly in a mutual fund scheme, just like the regular deposits made in an RD.

You can invest in equity mutual funds via SIPs, and earn high returns. Equity funds give high returns, but at high risk. SIPs are an excellent way of investing in mutual funds. You enjoy rupee-cost averaging on investing in mutual funds through SIPs. Rupee-cost averaging helps average the cost at which you buy mutual fund units. You are able to buy more units of the mutual fund scheme when stocks markets are down and lesser units when stocks markets are up, averaging the cost of purchase.

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SEE ALSO: Different Types of Mutual Funds

Step by Step Guide on Investing in SIP

STEP 1: Understand Risk Appetite:

Understand risk tolerance before investing in mutual funds through SIP. Know your risk appetite (This is the ability to bear risk) and then make the investment. Equity is suitable for aggressive investors.

Identify financial goals like buying a car or children’s education and then invest in mutual funds. Invest in equity funds only if you have a time horizon of 5 years or more.

STEP 2: Choose the Mutual Fund Scheme

There are a number of AMCs and mutual fund schemes. Choose the mutual fund scheme which helps achieve financial goals and start the SIPs.

• Fill up the SIP application form.
• Submit the cheque for the monthly SIP amounts. You can also fill the ECS or Electronic Clearing Statement for the online mode.
• Provide cancelled cheque and proof of address.
• Complete KYC.

STEP 3: Select SIP Date

With SIP, money gets auto-debited from savings bank account. Choose a convenient date for SIP payments. This should be close to salary date as there’s sufficient money in the bank account. You could choose SIP dates from 1,5,10,15,20 and 28.

STEP 4: Fix duration of SIP

Fix a convenient duration for SIPs after calculating the SIP amount to meet financial goals. Choose between the online and offline modes.

STEP 5: Stay Invested till end of investment Period

SIPs create wealth through the compounding benefit. You need to stick with SIPs for the long-term. SIPs help you get rich, without the need to time the market. Stay invested in SIPs till the end of the investment period.

Start a SIP

• Keep Requisite Documents Handy

You need PAN Card, Address Proof like Passport, passport size photos, cheque book for SIPs. Driving License, Utility Bills like electricity bills and water bills and bank statements serve as address proof. Process SIPs online with these documents.

• Complete KYC

Complete name, date of birth, address and mobile number for KYC. KYC helps start SIPs in multiple mutual fund schemes. Log on to the mutual fund house website of your choice and submit soft copy of PAN and address proof.

• Start SIP Online

After completing KYC, visit the mutual fund house website and search for the ‘New Investor’ link. Fill in the basic details and create your Username and Password.

How to Invest in iSIP?

These are the steps to invest in iSIP:

• You must first visit the AMC website
• Fill up the online iSIP form
• Enter PAN Card details and also bank details
• Enter name of the mutual fund scheme, SIP amount and the frequency of SIPs
• Fill in the nomination details
• After filling the form, the URN is generated and sent to your registered email ID.

Choose the auto-debit facility when registering the mutual fund scheme with the bank. Once auto-debit facility is activated, money is automatically debited from your bank account and transferred to the mutual fund house on the specified date. Keep URN (Unique Registration Number) handy. You need this for future references pertaining to online SIPs.

SEE ALSO: How To Make Your First Mutual Fund Investment?

What is Unique Registration Number?

Unique registration number or URN is generated after all required information is filled in the online form. The URN number shows up on the screen, and this number is sent to the registered e-mail ID. You get URN sent to registered mobile number as an SMS notification. With URN you can easily track online SIP in mutual fund schemes.

Don’t forget to add mutual fund as new biller. You must log on to bank’s networking site to include your mutual fund scheme. Do this within 10 days of the URN generation. If you don’t, URN is deactivated.

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