Investments in mutual funds have been blooming for a few years. More and more people are considering to invest in mutual funds for short-term or long term benefits. The investments in mutual funds are managed by the experts who help you in gaining maximum profits from your investments.
SIP or Systematic Investment Plan is the best way to invest in mutual funds as it helps in creating wealth in the long run. It allows investors to make equal and regular payments in various investment applications like mutual funds, trading account/retirement account. SIP helps the investors in investing in mutual funds regularly and also brings financial discipline in the lives of the investors. Recent reports suggest that SIPs have been gaining popularity amongst the mutual fund’s investors.
The process of investing in mutual funds has been simplified and has been made accessible via i-SIP facility.
What is an i-SIP facility?
i-SIP stands for internet-based Systematic Investment Plan facility. This facility allows you to set up SIP online and is a total paperless method. After you have setup SIP via i-SIP facility, you need to add Asset Management Company (AMC) which is a Mutual fund house as a biller. You can add AMC as a biller in your bank via internet banking. iSIP in every scheme follows the same process. So, you will have to repeat this process to set up SIP in every scheme.
The purpose of choosing AMC as a biller is because it provides the bank with your monthly bills. While selecting the biller, you can opt for ‘auto-pay’ option. Under this option, the payment will automatically be deducted from your account.
To avail this facility, certain conditions need to be fulfilled:
- A bank account with Netbanking facility and is compliant with KYC
- The bank where you have your savings account should be eligible to offer the i-SIP facility
A step-by-step guide on activating SIP via internet banking:
Follow the steps mentioned below to set up SIP via HDFC internet banking facility.
- To begin, visit the netbanking portal of HDFC bank. To visit the link, click on the link mentioned below:
- Log in the net banking portal by using your account credentials.
- After successful login, click on ‘BillPay & Recharge’ tab available on top of the page.
- After this, click on ‘Continue’. You will be redirected to another page once you click on ‘Continue’.
- You will be taken to a different page. Here you’ll see a screen similar to the one mentioned above. Once you have reached there, you need to click on ‘Add Biller’ which is available on the right side of the screen.
- Once you have clicked on ‘Add biller’, you will have to select one option from the plethora of categories available. Choose ‘Mutual funds’ for i-SIP.
- You will see a dropdown list of all the Asset Management Companies. Select your AMC.
- Once you have selected your AMC, you will be asked to fill in some information.
- You will be asked to choose a ‘Nick name for your biller’. Make sure you are choosing something which is descriptive in nature and can be easily identified.
- Fill in ‘Unique Registration Number’ (URN). URN for this fund will be shared with you.
- Under ‘Set Standing Instruction’, choose ‘Yes’. With this, the amount will be automatically deducted from the bank account on a monthly basis. With this, you don’t have to worry about paying every month.
- For the next option ‘Pay Entire Bill Amount’, select ‘Yes’.
- On the next step, select ‘Payment method’. You can opt between debit card/credit card/bank account. If you click on ‘Bank account’, you will have to choose a bank account from the drop-down list.
- Once you have filled in all the information, click on ‘Add Biller’.
- The next screen will show you the summary of the details you entered and you will be asked to verify.
- To verify, click on ‘Continue’.
- Once verified, you will see a success message confirming your biller. It is advisable that you take a printout of the confirmation message which might be useful for future reference.
Which are some of the best SIP plans available in India?
Some of the best SIP plans available in India are ICICI Pru Bluechip Fund, Mirae Asset India Equity Fund, Franklin India Equity Fund, SBI BluChip Fund, and HDFC Mid-Cap Opportunities Fund.
Can SIP be missed and what happens if you miss your SIP installment?
SIP installment can be missed if you do not have sufficient funds in your bank account to pay for the mutual fund SIP installment. If you miss SIP due to insufficient funds, then don’t worry, your account won’t be deactivated. It will remain active even if you missed 1 or 2 installments.
Are there any penalties for missing your SIP installment?
Your AMC (Asset Management Company) won’t charge anything if you miss your SIP installment. However, your bank may penalize you for missing SIP due to insufficient funds. The penalty may range from Rs, 150 to Rs. 750.
Can SIP be temporarily suspended due to financial distress?
If you are facing financial crunch and won’t be able to pay SIP installment, then it’s is advisable that you ‘pause your SIP’. You will also be able to avoid penalties levied by the bank with this option. You can temporarily suspend your SIP for a minimum of 1 month and a maximum of 6 months. It will automatically be started once the suspension period is complete. To suspend/restart SIP, you must speak to your financial advisor.