in Finance, Investment, Mutual Funds

Best way to apply in SIP

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.

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  1. Can we purchase mutual funds online without having to pay the brokerage.
    Does CAMS, Karvy or mutual fund company has online transaction facility.

  2. If I submit for the SIP application for SBI Mutual fund through CITI bank account, will i be charged a brokerage ?

    • @Rajendiran
      Every bank has its own policy on service charge/brokerage. You should consult with CitiBank regarding same.

  3. After the march 10th guidelines. Do brokers will charge me brokerage for SIP. For eg. I have a sharekhan account if I set up a SIP through sharekhan for HDFc equity fund.Will I be charged a brokerage every month by sharekhan ?


    • @Mahesh
      Entry load has been scrapped by SEBI but brokers may charge brokerage or service charges for SIP or lump sum application.
      Brokerage/Service charges varies from broker to broker and fund to fund.
      You should be notified of the charges when you apply through them.

      As per SEBI guidelines, payment of brokerage or commission, if any, to the sponsor or any of its associates, employees or their relatives, has to be disclosed in the half–yearly annual accounts of the mutual fund.

  4. Hi All,

    Most of you might not be aware of the HDFC ‘Investor Services Account” (ISA) which can be opened for free, if u have a savings/salary account with them. ISA account allows you to purchase any mutual fund of any company online without any entry load or any other charges.Just select the fund from the drop down that they provide and pay through internet banking. You can also do a SIP, sell units , view statements, view past and current NAVs etc. The only catch here is you have to pay a quarterly maintainance charge of Rs.100 flat (irrespective of the number of funds you buy/sell or the number of transactions), which i think is nominal for the service they offer . You dont have to run around different AMCs and fill huge forms and waste your cheque leaves.

  5. Hi Pankaj,

    First of all thanks for all the info. I am a new investor and am doing some research before investing for first time in ELSS. I have a few queries. Can you help:

    1) Instead of applying directly to mutual funds, there are services like HDFC Invester (ISA as mentioned by someone earlier) and Kotak Securities. There is no entry load but some nominal Annual or Quarterly fee. What is your opinion on applying, buying and managing MFs via these services?

    2) Is it a good option to invest in ELSS now as after DTC is applied in 2012, ELSS wont anymore be a Tax Saving option and eventually the ELSS funds will die. (My concern is – If I invest now – How will these funds perform once DTC is applied? As they, wont get any new investors, the performance of these funds may detoriate)

  6. Hello mr Pankaj,
    This is Sunil. I m a CA student.I get only Rs. 3000 as stipend. I just want to know which mutual fund’s SIP plan will be suitable for me if I invest only Rs.500 per month.

    • @Sunil
      You can choose among HDFC Top 200 Fund, ICICI Pru Discovery Fund, DSP Backrock Top 100 fund , HDFC Equity Fund and Birla Sunlife Frontline equity fund.

  7. Hi Pankaj,

    First let me tell thanks for your helping nature by answering every question with patience. Its really appreciated.

    I have a query, I want to invest Rs 2000 through SIP for long term 25 years, could you please suggest good Mutual Funds in HDFC or SBI

    I have read your posts, MF’s which you are suggesting or having high NAV like HDFC Top 200, is this better to buy these type of MF’s now through SIP, as they have already grown in good ratio and they will grow more OR is there any other MF which is having similar portfolio with less NAV which can give me good returns after 25 years.

    Please suggest.


    • @Jagadish
      Some of the good funds are Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund, ICICI Pru Discovery Fund and Sundaram Select Midcap.
      While investing in Mutual funds, do not look for their NAV, look for how much returns they have generated in past (both in falling and rising market). Already established funds like HDFC 200 fund have better chances of giving you better returns than some other new funds with low NAV.
      Even if you buy 10 units of a fund of NAV 200 Rs (total investment 2000 Rs), a 10% return in a year will give you 200 Rs. Whereas 100 units of a fund with NAV 20 Rs (investment=2000 Rs) with 10% return will give same 200 Rs. So how does NAV matter here? Its the % return you should focus on.

  8. hi Pankaj!

    I’ve to invest in mutual funds for tax saving. Kindly suggest how should I divide a sum of roughly Rs. 30,000. I don’t have a demat a/c. Since I’m not from Delhi, my residential proofs bear the address of my hometown(Nainital). Would it be a problem while applying for KYC?

    The office deadline for submission of investment details is Feb. 10,2011.
    Kindly suggest if I should invest a part of rs. 30,000 in PPF too?

    Thanking you in anticipation.

    • @Abhishek
      Regarding KYC, you can provide your permanent address proof in both current and permanent address fields. There won’t be any issue in that.
      Now-a-day, all communications are done on emails too (like account statement etc.) and amount also gets credited to bank account directly in case of redemption, so address won’t be required later, in most of the cases.

      If you want to invest 30,000 for tax savings. I would advise following things.
      1. Term insurance (if not already taken, for a sum insured equal of more than 10 times your annual salary)
      2. Medical insurance (for you and your family) – This is covered outside 1 lac limit under section 80D.
      3. PPF/NPS (In case you are already depositing some amount through employer EPF account, you may skip this part)
      4. Equity linked mutual funds.

      First of all get 1st and 2nd thing and then divide rest of the money among 3 and 4.

      • Thanks a ton for the timely information Pankaj! You’re advice is really very helpful for the ‘finance-fearing’ folks. 🙂

        Pankaj, just one more query:-

        My father had brought LIC Money back policy for me. Should I buy any other policy? If so, then kindly suggest which one to buy. (From Term insurance plans as suggested by you.)

        Please also advice upon the Medical Insurance policy. How much should I put in it?

        Thanking in anticipation!

        • @Abhishek
          LIC money back policy is not a very good policy considering from both insurance and investment angle.
          In India, where most of the people do not understand concept of insurance and always ask “Wapis kitna milege??”, Insurance companies and agents are making quick money on commissions by selling bad policies.
          Unfortunately, insurance and investment which should never be combined and are altogether different aspects, are sold most here.

          Regarding term insurance, you can buy LIC Amulya Jeevan if you are particular about only LIC.
          Else you may also consider Metlife Metprotect, Kotak e-Preferred Term plan and ICICI pru iProtect (all these policies can only be bought online and comes at a very cheap price as agents are not involved here).

          For medical insurance, you may choose Star health, Apollo Munich or Max Bupa. If you are married, go for a family floater policy (total sun insured 3-5 Lacs). It will cost you between 4-8000 per year depending on requirements.

          • Pankaj,

            In your earlier post you wrote “Investment in Medical insurance (for you and your family) – This is covered outside 1 lac limit under section 80D”…Can you tell me how much is the limit for this if I have to invest in medical insurance. Currently I am single and I already have a medical insurance from My company which is free. Should I take one more policy? which is better? ABOUT ICICI I protect, i saw some reviews, which says the claim procedure with ICICIbank is very bad? Have you heard of anything wrong with this policy?

            • @Vicky
              Under section 80D, Rs 15000 can be claimed for income tax exemption for premium paid towards medical insurance for yourself and family (spouse and children).
              In case you have also paid premium for medical insurance for your parents, another 15000 (20000 in case parents are above 65 years) can be claimed for tax exemption.
              So exemption for max 35000 can be availed for medical insurance premium under section 80D.

              One must get a medical insurance by himself too (other than company provided), as there might be a medical emergencies in time period between two jobs as well.

              ICICI iProtect is not a medical insurance, its a life insurance (term). LIC has best record in claim settlements. ICICI is also not that bad among private players.

  9. Hi Pankaj,

    Since I have an account with HDFC, is it the right time to invest in their tax saving mutual fund? Would you even now recommend SIP or can I invest around 45000 – 90000 in the elss? If I do it through SIp can it be quarterly?

    Also which is your recommendation for a good 12 month investment either through Sip or one time?

    Thanks in advance.. Your work is really praiseworthy.

    • @Siddharth
      HDFC tax saver is one of the best fund.
      There is not much time left in this financial year to run SIP. You may consider starting that from next financial year.
      SIP is a recommended way of investment in mutual funds as it protects you against market up-downs.

  10. Hi Pankaj,

    I am pretty new to this world of SIP – and just getting to read about this. One question is, Is the auto debit system mandated in SIP? If yes, what feature in SIP calls for this auto debit system, linking to a bank etc. Why not the simple pay online / pay in person monthly method also permitted? Any specific reason behind this?

    • @Ramya
      SIP is a term for systematic investment plan, where you invest after every fixed duration for certain amount. For investor convenience, mutual fund companies asks for auto-debit/ECS or advance cheques.

      Without signing up for auto-debit facility, you can also do same thing, if you are disciplined enough. Logically it will be a SIP, but it will still be called as lump-sum investment. Its not very easy for most of the people to do this as it needs action every month and punctuality.

      Only for some people, who are internet addict (like me), it makes sense, where one can put reminder on Google calender and follow that every month. But you never know, you can be busy or out of town when investment date comes in!

      There are some companies like who have this kind of facility (virtal SIP), where they send reminder email and sms on the date of transaction.

  11. Dear Pankaj,
    Thanks for the awesome suggestions regarding the MF. I want to invest 2000 Per month monthly in mutual fund. Pls suggest me in which bank should i go for it. I want to invest for 3-5 years, no more than that.

    • @Ajit
      Please let me know if you want to invest for tax saving or for general investments?
      You can invest among Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund, Reliance Regular Savings – Equity, if you are looking for diversified equity mutual funds.

  12. Dear sir, i am beginner and would like to invest Rs 1000-1500 thr SIP. Plz suggests some mutual funds.
    Is Reliance gold saving fund a good option, he yes then which plan will be better Growth or dividend- payout/reinvest?

    • @Siddharth
      I would advise you to start SIP in any of the equity diversified funds: Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund and Reliance Regular Savings – Equity.

      Reliance Gold savings fund is a open ended mutual fund (you may purchase and redeem anytime) that will invest into Gold.
      There is no entry load on investment, but there is an exit load of 2% if redemption/switch is done before one year.

      Till now, Gold could be bought through ETF (exchange traded funds) or e-gold, both of which needs demat account to transact. Also there was no option for a SIP in these methods.

      If you want to diversify your portfolio by adding gold investment, this fund will be good option.

      But as its a new fund, there is no history of performance and as of yet it cannot be compared with returns from Gold ETFs. Only time will tell its performance.

      If you already have a demat account, I would advise you to invest in Gold ETFs, as they directly move with gold prices and there are not much management charges.

  13. I have a mediclaim policy for me and my wife for last 10 years. I am 45. The policy is Rs 4.oo lacs each from New India Assurance.

    I wish to take another mediclaim to take care of small claims say Rs 1.50 lacs each for my self and wife. THis is because I lost NCB earlier due to small claims.

    Pleasae advise

    • @Ajay
      In case you are covered by more than one medical insurance, while making a claim, all insurance companies have to informed and they divide the reimbursement accordingly.

  14. I want to invest Rs.2000/-through SIP. Which is the best MF to invest?How many years I have to invest?

    • @Rajendra
      You can choose o invest in Birla Sunlife Frontline equity fund, HDFC Top 200 Fund, DSP Backrock Top 100 fund or Reliance Regular Savings – Equity.
      You can invest through SIP for minimum 6 months. But stay invested for atleast 3-5 years in these funds.

  15. Hi Pankaj,

    I plan to invest as below in SIP in Equity funds from Savings Account A and Savings Account B
    For my Son (for atleast 15 years) DSPBR 100 and BSL Frontline Equity from Savings Account A
    For My Daughter (for atleast 15 year ) IDFC Imperial Equity and HDFC Top 200 from Savings Account A
    For My Nephew (for 6-7 years) DSPBR 100 and HDFC Top 200 from Savings Account B
    For Self (for 10 years) Reliance Regular Savings,Fidilety India Growth and Quantum Long Term From Savings Account B.

    Once you approve of the choice of funds I will decide on the amount based on the goals like education,marriage and retirement primarily.

    The idea behind 2 savings accounts is that I can track performance and change funds if I need to.

    Since I am a new investor I have tried to come up with this plan.Please let me know your views if this is the correct way to go about this.

    Also thanks for this nice website.Have got lot of info surfing through this site.

    Thanks And Warm Regards,

    • @Santy
      All of the funds chosen by you are good and are top performers.
      All of these invest into large cap equity stocks.
      For diversification, you can consider adding some mid and small cap mutual funds also like below:
      ICICI Pru Discovery Fund, DSP Blackrock small and midcap fund, Sundaram Select Midcap and HDFC Equity Fund

      Also apart from equities, you should add Gold and Debt based investment too into your portfolio to give you overall diversification.

      • Thanks Pankaj,
        Can you advise about Debt based investment?Also is my idea of 2 savings account for the performance tracking correct or is there a better way?For gold some tell me to purchase physical gold as and when possible while some advise Gold ETF.One of my friends asked me to look into purchase of Silver!!!!.Please comment.

        Thanks And Warm Regards,

        • @Santy
          I am not sure, investing from different Savings account serve any purpose or not.
          Ultimately mutual funds will be bought under a mutual fund folio account, performance of which can be tracked separately. You can keep separate Folios for different investments.

          Regarding metal investments, you can consider e-gold and e-silver from National Spot Exchange Limited (NSEL). You can also buy Gold ETFs on your demat account. There is no need to buy physical gold/silver. Reliance and Birla mutual fund have also launched gold ETF based mutual funds too.

          In debt based investment, you may consider Post office MIS, Fixed deposits, PPF etc.

  16. @Pankaj:
    My question to you is about your response to to e-gold and e-silver. Can you desribe the procedure and steps to fillow on how to buy this e-gold and e-silver from National Spot Exchange Limited (NSEL). . I have a DMAT Account with ICICI and also an account with I-Fast Finanicail Services. Please explain it in brief the procedure and will there be any transaction charges for this.

    • Also what will be a good amount to start the investment with. Is SIP method will be good or lumsum investment for e-Gold and e-Silver.

      • @Vicky
        SIP is not available for investment in e-Gold and e-Silver. You will have to buy yourself every month.
        You can start with 1000-2000 investment per month.

    • @Vicky
      E-Gold is a product from National Spot Exchange Limited (NSEL). Investors can invest in gold (minimum 1 gram) in demat form. One can trade and invest in gold just like shares. The clearing and settlement pay-in and pay-out are based on T+2 cycles. One can also take physical delivery of gold, against his E-GOLD units.
      Similarly NSEL has E-Silver and E-Copper products too, using which Silver and Copper can be traded in demat.

      The storage charges of holding gold in demat form is Rs.0.60 per unit/month.

      You have to open a separate demat account for trading with NSEL as For holding equities and commodities, separate demat accounts are required. However, if you have a demat account opened for MCX trading, the same account can be used for NSEL. But, if you have demat account for other stock exchanges/ commodity exchanges, then you have to open separate demat account.
      NSEL has empanelled Depository participants which includes Globe, Religare, Karvy, Goldmine, IL&FS, Monarch, SMC, SSD, SHCIL, Alankit, Zuari, LSE, Geojit BNP Paribas, Master Capital, India Infoline and Aditya Birla. So one must have an account with any of these firms in order to trade in E-Gold. Big stocking forms like ICICI Direct, Kotak Securities, Sharekhan, Reliance etc are not there in the list.

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