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It has the most charm for new investors. For equity linked investments, SIP is considered the best option. In this, one can invest a fixed amount in the fund for a fixed period. SIP is considered a guarantee of tremendous returns in the long term.
The first step to open a SIP account for mutual funds is to get the KYC done. For this, personal details like name, address, office address, ID proof, etc., are verified. On the KYC portal, one needs a copy of the cancelled check from bank account, passport size photo, PAN card as ID proof and a bank statement or driving license as proof of address.
The first is to complete KYC. For this one has to give details like name, and address. This verification can be done either through video call or through Aadhaar OTP. After KYC verification, account is opened.
After this, choose any mutual fund scheme of choice and register to start SIP in it.
One must choose SIP and then choose the time of investment. After this, enter the bank details from which the amount is to be deducted.
The risks associated with SIP are like any possible risk of investing money anywhere. Investment can be started with a small fund; hence the possibility of high risk is eliminated. If one invests in SIP of a company which is incurring losses and is not able to earn profits, then the chances of losing money increase.
There are many benefits of investing in SIP, like if one falls under the income tax slab and file income tax return, then SIP will be beneficial for him as it can provide exemption in tax return.
Compiled by Syed Muskan