Merry Christmas! I was busy relocating and hence haven’t had time to post. I received a couple of inquiries as to how to go about investing in mutual funds (MF) and systematic investment plan (SIP). Actually it’s very simple and you don’t need to really have a trading account to invest in MF. The main questions are - How much to invest? Whom do I approach? What is the process? Which fund to invest in?
The requirements are you need to have a bank account and a permanent account number (PAN) if you are planning to invest above Rs 50,000/-. These days many banks, fund houses, brokerage houses have financial advisors to guide you through the investments.
How much to invest?
Initially you can invest as low as Rs 5000/- for a fund, in case of SIP the minimum amount of investment varies from Rs 500/- to Rs 1000/- and the period from 6 months to one year.
SIP is ideal for small investors who want to save regularly every month. This is one of the best options as you can start investing with a small amount and accumulate.
Whom do I approach? What is the process?
One can approach private banks, brokers, and fund houses who offer this service. Ideally if you are having an account in any of the private banks like ICICI, HDFC, Kotak etc you can just walk in to the branch and ask for a mutual fund application, fill it and hand over the application along with a cheque for the amount of investment. In case of SIP you make have to give post dated cheques or Direct debit instructions for debiting your account. (Direct debit instructions do stop at the end of the period, so need not worry about that. There are no fines/charges/penalties if the account doesn’t have sufficient funds..You would just skip it and pay the next SIP). Or alternatively you can go into any brokerage houses like Bajaj capital, Geojit etc and do the same. You can even call them and one of the financial advisors will be able to help you at the place of your convenience. You would receive monthly statements for investing you can choose either physical or email statements.
The redemption procedure is simple too; just give a letter for withdrawing the sum and the amount shall be credited to your account in three to five working days.
Which fund to invest in?
That’s a tricky one and would need more detailed discussion will come back later.
PS: dont feel shy about talking to financial advisor , they will be glad to help you to choose your investments.....
