The first step to invest in the mutual fund through SIP is to get your KYC done. To prevent money laundering, it is mandatory to complete KYC while investing in mutual funds. The documents that have to be submitted to complete the KYC are the copy of the PAN card, address proof like Aadhaar or passport, passport size photographs and a cancelled cheque.
You can also complete your KYC process through Central KYC (cKYC). Central KYC has been introduced by the Government to simplify the KYC process. Central KYC is a single KYC for an investment in different financial products, across financial regulators.
There are nearly 5,000 types of mutual funds and not every mutual fund suits your needs. You must choose a mutual fund which suits your needs. If you are not ready to take risk, you should invest in debt mutual funds. Debt mutual funds are considered a safe investment, and it offers you fixed income.
If you are open to take risk in investment, then you can invest in equity mutual funds. Equity mutual funds offer you high returns, if you stay invested for a long period of time.
You can also invest in balanced funds, which are a combination of debt funds and equity funds.
Based on your financial goals, you should decide how much you are ready to invest every month via SIP. The minimum amount of investment that can be made through SIP is Rs 500 a month. Once you start investing, you won't be able to reduce the SIP amount. So you should choose the SIP amount wisely.
You will be given the option to choose the investment date by yourself. This date is fixed and you should invest only on that date. You should choose the date which is very close to the date, you get your salary.
You will have the option to select the mode of payment of SIP. Instead of transferring the SIP amount manually, you must opt for the auto debit facility. Under the manual option, there are chances you might forget to transfer the money. If you choose the auto debit facility, the money will automatically be debited from your bank account.
The last step to invest money in mutual funds is to fill all your details in the common application form, including the passport size photograph and submit it to the Asset Management Company (AMC).
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