One of the smartest ways of investing is to make the most out of market volatility and it is important to invest in mutual funds through systematic investment plans (SIP).
Investing through SIPs gives an individual the advantage of rupee cost averaging, which is an effective way to average out the cost of acquiring an asset, which is stocks.
For example, a security is available at five different price points between Rs 200 to Rs 250 over a period of two months, then one could average out the cost of acquisition through SIP investments in these two months instead of risking buying at the higher end of the spectrum.
This can increase the possibility of earning profits in mutual funds.
1. At the very beginning, you need to open an account with a mutual fund house or an aggregator like Groww or Zerodha and for that you need an e-KYC to be done through an OTP sent on your mobile number which is linked with your Aadhaar card.
2. After opening the account, you can go to a new transaction and here you will find two options – lumpsum and SIP. You can choose the option you would like to proceed with.
3. Now you can add a new scheme and will get two options to choose from. One is lumpsum and the other is SIP. You need to choose the SIP.
4. You now need to choose the scheme you want to invest in and enter the amount you wish to invest.
5. Now you can choose the SIP start date by opting for any date of the month.
6. You can also choose the end date for the SIP by choosing the number of installments or by choosing the last date.
7. Typically, AMCs give three options: continue SIP till cancelled, choose the number of instalments and continue till a particular date.