Mutual Fund SIP: Benefits and How to Set It Up

Investing in mutual funds has become increasingly popular among retail investors in recent years as it offers a simple and convenient way to diversify their investments across multiple asset classes. The systematic investment plan (SIP) is a unique feature of mutual funds that allows investors to invest small amounts of money at regular intervals, typically on a monthly or quarterly basis. In this article, we explore the benefits of investing in mutual fund SIPs and how to set them up. We also suggest how to use the Bajaj Finserv App to invest in mutual fund SIPs.

Benefits of Mutual Fund SIPs

The following are the key benefits of investing in mutual fund SIPs:

1. Lower Risk

Systematic investing helps in reducing the volatility in returns that may be associated with lump-sum investment and reduces the risk factor over a period of time. This ensures a disciplined approach to investing and may result in higher returns in the long run.

2. Cost-Effective

SIPs are a cost-effective way of investing in mutual funds. The cost of investing in a systematic investment plan is comparatively lower than the cost of investing in a lump-sum investment. Besides, the withdrawal of the SIP scheme can be done with no penalty or minimal exit charges.

3. Flexibility

The SIP amount can be chosen as per one’s financial capacity. It can be Rs. 100 per month or even higher, depending on the investor’s financial goals. SIPs are quite flexible, as the investors can increase or decrease the amount or stop the investment at any point in time, subject to the terms and conditions stipulated by the mutual fund house.

4. Power of Compounding

SIPs provide the investor with the benefit of compounding. By investing regularly, even if the amount invested is relatively modest, the investor will reap the benefits of compounding in the long run.

5. Disciplined Investing

SIPs make investing a disciplined exercise as the investors get used to investing as per a pre-determined plan every month. Many investors may find it difficult to invest a lump-sum amount in one go, and hence, SIPs provide a more disciplined atmosphere for investment.

How to set up Mutual Fund SIPs

The following steps are involved in setting up a mutual fund SIP:

Step 1: Choose the mutual fund house

The first step in investing in mutual fund SIPs is to choose the mutual fund house where you want to invest. One should research the various mutual funds and their track record to select the most appropriate one for your investment goals.

Step 2: KYC and account creation

Once one has chosen the mutual fund house, the next step is to fulfill the KYC requirements. KYC is the process of identifying the investor as per regulatory requirements. One can complete the KYC by submitting the necessary documents, such as identity proof, address proof, etc., to the mutual fund house.

Step 3: Fill up the application form

After the KYC is complete, one needs to fill up the application form for the SIP. The application form contains details such as the amount of investment, frequency of investment, the period for which the SIP is to be maintained, etc.

Step 4: Link bank account

After filling the application form, the investor needs to link his/her bank account for investment. In some cases, an investor can also link their credit card to the SIP as a payment option.

Step 5: Sign and submit the form

The investor needs to sign the application form and submit it along with the necessary documents as required by the mutual fund house.

Step 6: Start investing

Once the mutual fund house processes the application, the SIP gets activated, and the investment process starts. SIP is an automated process, and the invested amount gets deducted directly from the investor’s bank account at the designated intervals of time.

How to use Bajaj Finserv App for Investing in Mutual Fund SIPs

The Bajaj Finserv App is a powerful tool that has been designed to provide investors with easy access to invest in a variety of financial products, including mutual funds. Here is how one can use the Bajaj Finserv App to invest in mutual fund SIPs:

Step 1: Download the Bajaj Finserv App

The first step in using the Bajaj Finserv App for investing in mutual fund SIPs is to download the app from the Google Play Store or the App Store, depending on whether one uses Android or iOS.

Step 2: Register and create an account

Once downloaded, one can register on the app and create an account by providing the necessary details, such as name, email id, phone number, etc.

Step 3: Complete the KYC process

After creating an account, one needs to complete the KYC process by submitting the necessary documents, such as identity proof, address proof, etc.

Step 4: Choose the mutual fund house and scheme

Once the KYC process is complete, one can select the mutual fund house and the respective mutual fund scheme that they want to invest in.

Step 5: Decide on SIP amount

One needs to decide on the amount to be invested in the SIP and the frequency of investment.

Step 6: Link bank account and set up auto-debit

The investor needs to link their bank account to the Bajaj Finserv App and set up an auto-debit for investing in the SIP.

Step 7: Start investing

Once the auto-debit is set up, the Bajaj Finserv App will deduct the SIP amount from the investor’s bank account automatically and invest it in the selected scheme.

Conclusion

Mutual fund SIPs are a wonderful investment option for retail investors. They offer flexibility, cost-effectiveness, and a disciplined approach to investing. One can easily set up a mutual fund SIP by following the above-mentioned steps, and using the Bajaj Finserv App simplifies the process even further. The Bajaj Finserv App is an ideal app for investors looking to conveniently invest in mutual fund SIPs and other financial products.