InvestorQ : how to choose sip correctly
AMIT BODRA made post

how to choose sip correctly

seema Upadhyaya answered.
4 years ago
Welcome to the world of investing and Systematic Investment Plans (SIPs).
SIPs have been the flavour of the market for the past many months and its increasing popularity can be credited to various reasons such as investors wanting to participate in the equity bull run, as well as the constant advertisement and marketing around it.
But one of the main reason more and more people are choosing to invest via SIP is the ease it provides. You only have to select the mutual fund you want to invest in, complete its necessary Know Your Customer (KYC) details and voila, you can make your first SIP payment for as low as Rs. 500.
You can start your SIP journey by understanding what’s your risk appetite or how much risk you are willing to take. Based on this decision you can choose to invest either in equity mutual funds or debt mutual funds.
Then, you must define your goals and investment horizon. This exercise will help rule out certain investment options for you and help decipher whether you need to invest in:
- Small cap stocks: High risk with high returns
- Mid cap stocks: Moderate risk with high returns
- Large cap stocks: Low risk with relatively lower, but stable returns
Once you find out where you are most comfortable investing, you can pick the best performing funds and start investing in them.
From documentation point of view, you will be required to complete your KYC compliance to invest in mutual funds. Please note, this is a one-time process. The documents required for KYC are:
- one self-attested photocopy of address proof
- one self-attested photocopy of PAN card
- one photo