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Best way to apply in SIP

Posted in Finance, Investment, Mutual Funds.

Best way is to apply directly to the Mutual Fund company as it will save your 2.25% money as If you apply thru any broker entry load of 2.25% will be cut.

For example, If you invest 1 Lakh into a Mutual fund, 2250 Rs will be deducted straight forward, if you go thru your broker.

Download the mutual fund form in which you want to invest from their website. (Download links provided for all is provided here). Take print out of application form and SIP form. Fill all details, attach a copy of PAN card and cheque and submit the form to nearest CAMS or Karvy investor centre or Mutual fund office. Office locations of CAMS can be found here and for Karvy, it can be found here.

In SIP form, you have to specify your bank details such as account number, branch name, location, MICR code, IFSC code. Auto debit authorisation will be done by Mutual fund itself. It will take 30-40 days for SIP auto-debit to start as first mutual fund house will send the form to your bank. When bank will approve your details, auto-debit will start from your account for SIP.


69 Responses

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  1. Siddharth P. says

    Hello sir, please clarify: If I start SIP in any equity mutual fund for 10yrs, and after 10yrs if fund is doing good, can I still continue the SIP for another 5 to 10yrs?
    2nd ques: in other case around, if in between 10yrs I need money, can I redeem the units?

    • Pankaj Batra says

      @Siddharth
      SIP can be started for even six months.
      SIP is nothing but same as month investment. Each month’s investment is treated as individual investment.

      You can redeem most of the mutual funds anytime (tax saving MFs are exceptions which have 3 years lock-in). Some mutual funds may put exit load if exited before a particular time period (say 6 months or a year).

      Personally I don’t think that there is a need to start SIP for as long as 10 years, you should start SIP for 1-2 years only and based on its performance, keep changing mutual funds after SIP period gets over.

      Also, you can stop SIP anytime in between too. Say, even if you have signed for 10 years SIP, you can stop investing at any time.

  2. Nidhi Agarwal says

    @Siddharth

    SIPs are a basic step towards creating wealth for you and your family. Whether you are a beginner or a sophisticated market player, even if the market is at an all-time high else at rock bottom, it is a disciplined approach to investing. Quite similar to the recurring deposit that we used to hold in our banks.
    You will find more information on SIPs on this blog:

    http://mutualfundspecialist.blogspot.com/

    You can also invest in SIPs through fundsupermart.com you can find more information here:
    http://www.fundsupermart.co.in/main/research/viewHTML.tpl?articleNo=690

  3. SACHIV KUMAR SINGH says

    Dear Sir,
    I am sachiv singh ( age 24 years) and I want invest Rs. 5000.00 monthly in SIP and tell me about large cap mutual fund, mid cap mutual fund,and balanced fund( with name) . and also suggested me for percentage of amount invested in different funds

    • Pankaj Batra says

      @Sachiv
      Large Cap Equity: DSPBR Top 100 equity and Franklin India Bluechip

      Equity Large & Mid Cap: Fidelity India Growth, ICICI Pru Dynamic Inst, HDFC Top 200, Canara Robeco Equity Diversified and Franklin INdia prima plus

      Equity Multi Cap: HDFC Equity, Templeton India Growth and HDFC Growth

      Hybrid/Balanced Equity Oriented: Reliance Regular Savings Balanced, HDFC prudence, DSPBR Balanced, HDFC Balanced, HDFC Children’s Gift and Birla Sunlife 95

      You can split 2500, 1000 and 1500 into large cap, balanced and mid cap.

  4. Nitin says

    Hi Pankaj,

    I’m 27 and currently having SIP of 2000 pm each in DSP Rock Top 100 & HDFC Top 200. I want to have 2 more SIP and thinking on IDFC Premiere Equity and ICICI Pru Dynamic/BNP Paribas. So just have a doubt that as I have more mid/large cap SIP so shall I go for ICICI PRu Dynamic or BNP paribas?

    Also, I have got a life term and want to discontinue my LIC for which I pay a premium of 16,000 pa. I have paid a premium of about 72,000 in last 4.5 years and have received a return of 45,000 in 4th year year, so, most probably if I discontinue it I’ll get a return of only 17,000 (including bonus) which makes total return 45000 + 17000 = 62000 only. So is it good to discontinue the policy now or shall i wait for few more years.

    • Pankaj Batra says

      @Nitin
      Both funds in which you are already invested are good. They are one of the best funds in their category.
      As DSP top 100 is Large cap and HDFC Top 200 is Large+Mid cap, you can now pick two new funds from different categories.
      IDFC Premier equity falls in Mid and small cap category, so it will be a good choice.
      ICICI Pru Dynamic is again from Large+Mid cap, so would be redundant with HDFC top 200.
      You may pick from multi cap category. Best funds in this category are: HDFC Equity, Templeton India Growth, HDFC Growth and Reliance Regular Savings Equity.

      Surrender value depends on kind of policy and terms mentioned on policy documents.
      If want to take a hit now for a better future, you may do it now. But if you see in policy document that surrender charges are less after few years, you may surrender after that time, to minimize losses.

      And Congrats on picking right financial plan by picking term insurance and equity mutual funds SIP.

      • Nitin says

        Thanks Pankaj.

  5. VIGNESH says

    hi pankaj,
    I am now 21. 1. looking to start for a long term sip (but u mentioned in the above post to avoid long term sip)tell me one with moderate risk?
    2.which one will be the best mutual fund for 5 yrs term(sip with moderate risk)?
    3. for tax saving i thought of investing in hdfc tax growth and fidelity tax growth each with 21500 is that a good option?
    4.is entering mutual funds at these down times good?
    5.i thought of buying ongc shares? Entering share markets at these times will do any bigger loss?
    6. what will we get each year if we buy mutual fund (say i opted for growth fund)?only i can see my money grow?
    Thanks for answering..

    • Pankaj Batra says

      @Vignesh
      1. If you are considering mutual fund with moderate risk, you can consider Balanced mutual funds, which have investments in equity and debt, So become somewhat less risky than pure equity ones. You may also consider large cap based mutual fund which invests only in big company stocks.
      2. You may consider DSPBR Top 100 equity/Franklin India Bluechip in large cap segment and HDFC prudence/DSPBR Balanced/HDFC Balanced in balanced category.
      3. Both HDFC tax saver and Fidelity tax advantage are good funds in tax saving category. You should start SIP in these rather than investing lump-sum.
      4. Investing in mutual fund through SIP at anytime is always good as it averages out cost. Otherwise in lump-sum, it cannot be predicted. Now market are down so its a good time to invest, but nobody knows will it go further down or not.
      5. Its difficult to predict market. Stocks are already trading at a good discounted price, but there is no down limit. if you are investing for long term (>5 years), you can invest now. For a short period, it may show losses too. But its the time in the market that matters and not the timing.
      6. In growth funds, there is no money back before redemption is done. You will only see you money grow (or fall).
      7. SIP can be started in tax saving mutual funds too. But only till 31st March, 2012 as after that tax saving mutual fund won’t carry any tax benefit once Direct tax code is implemented.

  6. VIGNESH says

    Left one thing in my above questions
    if i want to pay my tax saving mutual funds thru sip is that possible?
    Thanks

  7. VIGNESH says

    Thanks a lot .. gr8 work….i ll keep following ur posts. its very good

  8. shilpi jain says

    Hi, i am working lady 29yrs want to invest 500rs p/month on SIP, suggest me MF company to invest. I have no idea for any funds etc. should i opt HDFc, ICICI or Birla sunlife. And is thier any charges also/

  9. Mothilal says

    Hi Pankaj, Thanks for the lot of information sharing. Please suggest me, whether its good to opt for TIP(Target Investment Plan) investment instead of investing in SIP (Systematic investment plan). Please guide me with more details on how TIP works and its pros & cons.

    • Pankaj Batra says

      @Mothilal
      Target investment plan is a new concept introduced by some of the brokerage firms like ICICI securities. It automatically invests more or less amount every month on basis of returns delivered by earlier investments. It tries to buy more in a down market.
      Unlike SIP you won’t know how much amount would be invested next month.
      You would have to set a corpus amount, maximum investment amount, expected returns and a period.

      TIP works on the principal of fixed units over a specified period of time. Hence, you decided that you want X units per month. If the market conditions are good, then fewer amounts will be invested. If market conditions are bad, then more amounts will be invested. The advantage is you are sure that after some years, you will have specified units that can be encashed.

      You can read more about TIP here: http://content.icicidirect.com/newsiteContent/ProductService/includes/FAQ_on_TIP.pdf

      • Mothilal says

        Thanks for the Details. So TIP have more advantage than SIP in terms of return? Is it correct?

        • Pankaj Batra says

          @Mothilal
          In terms of returns it may beat SIP. But in case of falling markets, it may show more negative returns than SIP.
          It would be good for long term (more than 5 years).

  10. Raj says

    Sir I am 46 now and just started investing into SIP through HDFC . Since I have less knowledge, I wanted to begin through the help from relationship manager guidance. From your advise, I find that applying directly is a better way. In future investiments, if I do directly to Karvy , can I still use the DEMAT account of HDFC or should I have a seperate account ?

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