A Smart Way To Invest In Systematic Investment Plan

Mridul was a lawyer and banked a fairly good amount every month. His earnings were sufficient to meet his family needs and still a portion of his income was left as surplus by the end of the month. Usually, he either kept it in his savings bank account or bought some gold through it. Until his friend, Robin, who was an investment banker told him about the other investment avenues, like mutual funds Mridul liked the idea and on Sunday went to his friend for getting the proper insights of mutual funds and knowing how it works. Robin told Mridul that mutual funds one of the most secure investment methods. Along with varied schemes for investment, it has two different methods for facilitating the clients to park their money surplus in mutual funds. They are systematic investment plan (SIP) and lump sum. Through SIP, a client is able to have a regularized investment strategy over a long period of time. There is an edge of security and consistency in SIP.

Mridul was quite fascinated by SIP and asked Robin that how it works. He replied that there are three main stages of SIP which make it the best investment method for every client. There are numerous asset management companies operating in the society which provides innumerable schemes for satisfying the needs of each and every client. Thus, to have an accurate solution for satisfying your investment needs you should understand the below mentioned process.

Choose an AMC for investingFrom the pool of AMCs one has to select the most suitable and ethical company for handing over their hard-earned money. An established and renowned company will be capable of delivering better returns as compared to the ones who have started recently. However, this does not mean that the upcoming AMCs do not have the potential to grow and cater to the needs of clients. There are a lot of examples of the growing companies which have in a shorter span of time been able to give prolific returns to the clients over the period. Thus, for choosing a company to help you invest you must look at the past performance of the company along with the reviews of clients and experts as well. The authenticity of a company ensures that the money invested by the clients reaches back to them increased manifolds.

Discuss your requirements properlyAfter selecting an AMC you need to be frank while discussing your issues with the employee of that company. This is mandatory because unless the employee or the organization knows the requirements of the clients they would not be able help them. Thus, it is the combined responsibility of clients and companies to build up an environment where each one is free to give their views and take out solutions for the problems discussed. For example, on one hand a client should be able to express his/ her investment expectations and the purpose of investing. While on the other hand, it is the moral and legal responsibility of the companies that they take care of the client’s money and follow a lawful process to multiply their money. Also, it is a liability of the companies to make the clients aware of how SIP and mutual fund schemes work. Thus, there need to be perfect coordination among the clients and employees of the company to maintain the returns and build up a goodwill for the company.

Creating portfolioThe next level in the process, related to how SIP works, is creating a portfolio for the clients. On the basis of the information gathered from clients companies try to create a suitable portfolio for them. A portfolio is an online folder which shows all the investment details of a person. A client’s stock market investment along with the online mutual fund investment or any other recorded investments are shown in his/her portfolio. Thus, a client needs to build a healthy and strong portfolio in order to accumulate wealth over a long period. There are two portfolios viz, personal and scheme. The fund managers play a very crucial role in building up the portfolio for a scheme by investing in reliable companies which will provide better returns over the time. Personal portfolios are maintained by the individuals but with the help of investment experts, who guide the clients through the investment process.

Paying for the serviceThe last step involved the process of selecting and investing in an SIP is making the payment for the services which have been used up by the clients. There are various ways of making payment to the companies namely by issuing cheque, online banking, debit/credit card, NEFT/RTGS, etc. The mode of investment depends entirely on the company policies. But, in the recent times all the procedure have been automated. So, it provides an opportunity to the clients for making the payments by using the online modes that are more easy as well as secure.

Thus, the above-mentioned process fully defines one can how to invest in SIP and behind the scene working of it. A client should be well aware of the working strategy of investment process in which they tend to put their money.

Dishika is well-versed with the ups and downs of the financial market and has published articles on mutual fund and SIP. She is associated with MySIPonline.com, which is an AMFI registered mutual fund company.