How to Start a SIP (Systematic Investment Plan) Online
Investing in mutual funds through Systematic Investment Plans (SIPs) helps the investors to inculcate financial discipline into their lives by allowing them to invest regularly in the mutual fund scheme of their choice. The investors may choose the mutual fund scheme as per their risk appetite, financial goals, and investment horizon, and register a SIP therein to make periodic investments. You may register a SIP online and reap the benefits of the investment with a click of the mouse and the investors need not physically visit the office of the mutual fund house to make investments after that.
This blog aims to discuss the procedure to start SIP online below:
Initiating the Registration Process
The first step in the SIP process is to open the website of the mutual fund house, wherein the investor wants to invest. The homepage of the website will contain a link to proceed with an investment transaction which may read as ‘Invest with Us,’ ‘Make a Transaction,’ Invest Now’ etc. and the text may vary with different mutual fund websites.
Validating the Investor Status
The first page will typically prompt the investor to input the PAN (Permanent Account Number). The system checks the status of the investor with the help of PAN, as it is a 10-digit unique identification number issued by the Income Tax Department. The system checks for the existing investments of the investor and check the KYC registration status for the investor.
KYC Registration Process
If the investor is an existing investor and has completed KYC with any other mutual fund house, the KYC status will show as registered/verified for the investor and the investor may proceed with the investment process. However, if the investor is investing for the first time, he/ she will be required to complete the KYC process. The KYC verification process may also be sometimes completed online. Once the investor has completed the KYC process, he/she may continue with the investment process.
Moving ahead with the investment transaction after KYC verification, the investor will be required to input further details as necessary for the transaction to be processed, which among other things include the name of the mutual fund scheme and plan/option, amount of investment, details of the bank account, nomination details etc.
Entering SIP Registration Details
Once the investor has provided the above details, the portal will further confirm if the investor wants to make a lump sum investment or SIP investment. If the investor wants to register a SIP, further details like the number of SIP installments, the date on which SIP investment must be made; SIP amount, periodicity of investment, etc. must be entered.
Payment for the first SIP Installment
Once the investor has entered all the requisite details, the system redirects to the payment gateway for the payment of the first SIP installment. This step tends to vary with different fund houses, wherein some of the fund houses may redirect towards the payment for SIP installment, while the others treat the SIP registration confirmation as confirmed by the investor and process the first SIP installment as per the SIP details.
If the payment process has been initiated and completed, the investor will receive a transaction confirmation on the screen along with the time stamp. Further, the confirmation will also be received on the registered email address. The transaction confirmation page/ email will also contain a SIP Registration Reference Number, with which the mutual fund house identifies the SIP details.
Registration of Mutual Fund as Biller with Registered Bank Account
The process for SIP registration does not stop with the registration of such SIP with the mutual fund house. A mandate is also required to be given to the bank for payment of the requisite installments towards SIP investments. As such, the SIP must be registered with the bank through the BillPay mechanism, wherein the investor logins into the net banking portal of the bank and registers the mutual fund as the biller. The portal will also ask for the Reference Number, wherein the investor must input the SIP registration reference number as received from the mutual fund house. This helps the mutual fund link the specific SIP with the bank and automates the SIP debit process, as the reference number continues to stay unique for different SIP registrations.
Setting Biller Autopay
Once you register the biller, the bank will share the details with the concerned biller, i.e., mutual fund and validate the same. Further, the biller will submit the periodic SIP amount for payment as per the date specified by you during the SIP registration. However, the bank account, by default, does not pay the bills registered under your billers. Accordingly, the investor must set an autopay mandate in the net banking login, so that the bill is paid automatically when the mutual fund presents it for payment and the investment is made as per the SIP so registered.
Now that you know how to start SIP take a step ahead in executing the above procedure to register a SIP right away and move a step close towards accomplishing your financial goals.