What all to keep in mind while filling a SIP form?

Going to register for a SIP for your mutual fund portfolio? Here in this article, we have enlisted all those things that the investor needs to keep in mind while filing the SIP form.

Systematic Investment Plans have garnered a lot of popularity after the demonetization. Thanks to the financial inclusiveness and other initiatives taken by the government, SIP has become a common name among the urban as well as the rural community. This powerful tool gives the investor ability to manage their money within their restricted budget and time.

Personal Goals- Before registering yourself for a SIP, it is important to identify and pen down your personal goals. For short- term goals, debt instruments are the best, for long- term goals, equity investment is the best. Equity has the potential to offer greater returns as compared to any other investment option, but it is risky too.

Registration- Once you have determined the personal goals, now it's right time to sign the enrolment form. The form contains the applicant details like his name, mobile number and e-mail ID and other KYC norms.

Choose the first scheme carefully- If you are a beginner to the mutual fund industry, then determining the first scheme would require a lot of homework, as a plethora of schemes are available in the market. Simply put, you should select the scheme based on your goal, investment horizon and risk profile in mind.

  • Equity Linked Saving Schemes- These schemes are the best for investors who want to save tax. Investors can opt for growth based scheme or the dividend plan.
  • Debt Mutual Fund Schemes- The investor should select the debt mutual scheme carefully based on the investment horizon and risk profile. For example, you can invest money in a liquid scheme for a few days or in ultra-short term scheme that is suitable for investment for a few months in a year. The debt mutual fund schemes offer the investors higher returns than the traditional fixed deposits, provided the funds are parked for more than three years.
Additional Riders-The implementation of long-term capital gains tax on equity and equity-oriented schemes has added to the woes of the investors. Taking advantage of this, several insurance companies are promoting unit-linked insurance plans which offer an inbuilt cover which they can get by investing through SIP. Known by the different names, SIP Plus, SIP insures plans to come once again in the market. Anyone between 18-51 years can avail this facility

Time Horizon- Recently, the market watchdog SEBI has re-categorized the mutual fund schemes to add simplicity for the investors. As per the directive, the equity-based mutual funds are further divided into 10 categories and equity-based funds are divided into 16 categories each one having a particular time horizon.

Bank account details- If you are new to the mutual fund industry, hire a financial planner can make your job easier. But if you have an experience in the mutual fund industry then direct plans can provide ease and convenience in addition to saving you money in the long term. All you need to do is to submit your bank account details to the AMC, keep track on the investment portfolio, and maintain a minimum balance in the account to keep it running. The investor needs to carefully check his/her demat account details in both the cases.

Signature- Once you have gone through the details of the scheme, lodged KYC norms, you can then sign the form and submit the same to the AMC for the final processing. Or you can do the SIP process online too.


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