In mutual fund SIP investment compounding plays a very crucial role which helps us secure 4x or more returns on our investment. Always remember longer the period of holding higher the returns in mutual funds. If you would like to start SIP investment then here I will take you through step-by-step process.
There are multiple ways available through which you can start mutual fund SIP. I am going to show you the best way which will provide you one stop shop for all mutual fund schemes.
Normally, you can directly visit concerned mutual fund asset management company’s office or website to start investment in their schemes.
But in my opinion, it is not the ideal way. The reason behind is that if, in future, you would like to invest in some other AMC scheme then you would be required to visit website of that company and create another account.
This way you would end up creating multiple mutual fund SIP accounts with different asset management companies.
But what if I tell you that there is a India’s No.1 trading platform which enables you invest in all mutual fund schemes with one account along with option to directly invest in stocks, commodities, gold and government bonds?
I am talking about Zerodha trading platform.
For Systematic investment plan jump to 14:31 minutes timestamp.
How to start SIP in mutual funds?
Zerodha is India’s No.1 discount broking trading platform. It is a SEBI registered firm with more than 9 million client base.
To start your SIP investment, all you need to do is open Zerodha account and start investing.
Here are the valid reasons to choose Zerodha for your mutual fund SIP:
- Zerodha is India’s No.1 discount broker and their client base is 9+ million (it is so huge).
- The firm is registered with the Securities and Exchange Board of India (SEBI).
- With one account, you will be able to invest in mutual funds, stocks, currency and commodities.
- Mutual Fund investment is free in Zerodha. You don’t pay any brokerage.
- Your investment will be considered direct which means you will not pay 1% commission fee; which you usually pay when you invest through a financial adviser.
- Zerodha trading platform is super fast and advanced.
- It only takes 15 minutes to complete Zerodha account opening application process and within 24-48 hours you will be ready to invest. Click to know whether Zerodha is safe for investment.
Steps to start mutual fund SIP:
- First open your Zerodha Demat account which takes only 15 minutes.
- Once your account is opened, install Zerodha Coin app.
- Open app and search a mutual fund scheme you would like to invest in.
- Select scheme and choose SIP option.
- Enter the amount of SIP and confirm your selection.
- That’s it. You have successfully started SIP investment. Just make sure to add equivalent funds to your Zerodha account.
- Every month before the SIP date, make sure to add the funds to your Zerodha account. In other case, as explained in the video, if you have selected AMC SIP option then approve the mandate using your net banking account.
- In AMC SIP option, you don’t need to add funds to your trading account. SIP amount will be deducted from your bank account automatically on your SIP selected date.
Is SIP investment good?
Systematic investment planning is good for retirement planning and future financial goals achievement. It is recommended for those who do not have time to directly invest in stock market.
Your SIP investment may give you much much higher returns as compared to bank fixed deposit. But you should remember that mutual fund investment is exposed to market risk.
Mutual fund SIP investment is meant for long term holding say 5 years or more. If you are expecting goods returns in short period of time then look for other investment options.
SIP investment is capable of giving you higher returns due to compounding effect. More time you will give to your SIP planning more returns you will get at the time of redemption.
For example just ₹2000 per month systematic monthly planning with expected rate of return 12% for 20 years gives you ₹1998296. You would invest 4.8 lakhs throughout this period and in return you would get 20 lakhs. 4x returns on your investment.
If you could continue the same SIP investment for more 10 years then you would get ₹7059828 on ₹7.2 Lakhs investment. It is 10x returns.
It is the magic of compounding.