Starting a SIP in India involves completing your KYC (Know Your Customer) process, selecting a mutual fund scheme, and setting up a bank mandate for regular debits. You can initiate this through a distributor like Investably, which provides the necessary execution support to ensure your monthly investments are processed seamlessly and securely.
Last updated: · Reviewed by: Reetika, AMFI ARN 188582
Book a free 20-minute intro callWhat are the prerequisites for starting a SIP?
Before you can begin your journey with a Systematic Investment Plan (SIP), there are several regulatory requirements you must meet in India. The most important of these is the Know Your Customer (KYC) compliance. KYC is a one-time process required by the Securities and Exchange Board of India (SEBI) to prevent money laundering and ensure that the investor's identity and address are verified. To complete your KYC, you will need your Permanent Account Number (PAN) card, an Aadhaar card for identity and address proof, and a recent photograph.
In addition to KYC, you must have a valid Indian bank account. SIPs work through an Automated Clearing House (ACH) mandate, which allows the mutual fund house to debit the specified amount from your account on a chosen date every month. Having a net banking facility or an Aadhaar-linked mobile number for e-sign services will make the process much faster. Investably, as an AMFI-registered mutual fund distributor (ARN 188582), assists in the organisation of these documents to ensure your entry into mutual fund investing is smooth and compliant with current regulations.
Step-by-Step Guide to Setting Up Your First SIP
The process of starting a SIP has become significantly more streamlined with digital platforms. Below are the essential steps you will take to establish your investment structure:
- Complete Your KYC: If you haven't invested before, you can complete your KYC online (e-KYC) using your Aadhaar and a video-based verification process. This step is essential for all mutual fund transactions in India.
- Identify Your Financial Objectives: Determine the purpose of your investment, such as a child's education, a house purchase, or retirement. This helps in choosing the right category of mutual fund schemes.
- Choose a Mutual Fund Scheme: Based on your risk appetite and time horizon, select an appropriate equity, debt, or hybrid fund. Investably provides distribution support for a wide range of schemes from various Asset Management Companies (AMCs).
- Decide on the SIP Amount and Date: Select a monthly amount that fits comfortably within your budget and a date (usually shortly after your salary credit) for the auto-debit.
- Submit the SIP Mandate: Fill out the application form and the bank mandate (NACH mandate). This can be done digitally via an OTP or e-sign. The mandate gives permission to your bank to automate the monthly transfer.
- Monitor the First Instalment: Once the mandate is registered (which typically takes 10-15 days), your first SIP will be debited on the scheduled date, and units will be credited to your folio.
Understanding the Role of a Distributor in Your SIP Journey
When you start a SIP through a distributor like Investably, you are choosing a regular plan of the mutual fund scheme. In this structure, the distributor receives a commission from the mutual fund company, which is part of the scheme's expense ratio. This commission covers the cost of the distribution and execution support, the paperwork support, and the ongoing execution services provided to you. Investably does not provide investment advisory services. We focus on the distribution and execution of transactions to help you maintain your financial organisation efficiently.
Distributors allow you to view all SIPs in one place, which is helpful for busy professionals. As your portfolio grows, a structured distribution support system simplifies tracking your progress.
Illustrative SIP Journey: Investing for a Long-Term Goal
Consider a professional who decides to start a SIP of ₹25,000 per month in a diversified equity fund for a period of 15 years. The total investment over this period would be ₹45,00,000. If we assume an illustrative annualised return of 12%, the potential future value of this investment could grow significantly due to the power of compounding.
The following table illustrates how the value of a ₹25,000 monthly SIP could grow over different time horizons, assuming a 12% illustrative return. These figures are for educational purposes and are not guaranteed. Mutual funds are subject to market risks, and the actual returns may be higher or lower depending on market conditions.
| Period | Total Invested | Illustrative Future Value |
|---|---|---|
| 5 Years | ₹15,00,000 | ₹20,62,156 |
| 10 Years | ₹30,00,000 | ₹58,08,460 |
| 15 Years | ₹45,00,000 | ₹1,26,14,332 |
| 20 Years | ₹60,00,000 | ₹2,49,78,284 |
Try the numbers yourself
Frequently asked questions
How long does it take for a SIP to start?
After you submit your SIP mandate, it typically takes 10 to 15 working days for your bank to register the NACH (National Automated Clearing House) mandate. Some modern platforms and banks offer 'i-SIP' or 'e-mandate' facilities that can reduce this time to just a few days. Once the mandate is active, your SIP will be debited on the next scheduled date. It is important to ensure that your first instalment date is scheduled at least two weeks after your submission to avoid any technical delays in the first month.
Can I increase my SIP amount later?
Yes, you can increase your SIP amount using a 'Step-up SIP' or 'Step-up SIP' facility. This allows you to increase your monthly contribution by a fixed amount or a percentage every year, which is an effective way to align your investments with your rising salary. Alternatively, you can simply start a new SIP in the same fund or a different fund at any time. Investably provides the distribution support to help you set up these additional mandates as your surplus income grows, ensuring your investment structure remains steady.
Is it possible to pause a SIP instead of cancelling it?
Many mutual fund houses offer a 'SIP Pause' facility, which allows you to temporarily stop your instalments for a period of 1 to 3 months without cancelling the mandate. This can be useful during periods of temporary cash flow mismatch. If the pause facility is not available for a specific scheme, you may need to cancel the SIP and start a new one when you are ready to resume. Even if you stop the SIP, your existing units will remain invested in the fund and continue to grow based on the fund's performance.
What is the minimum amount required to start a SIP?
The minimum SIP amount varies by the mutual fund scheme and the fund house, but most equity schemes allow you to start with as little as ₹500 or ₹1,000 per month. Some specialized schemes or ELSS (Tax Saving) funds may also have similar low entry points. This low barrier to entry makes SIPs a very inclusive investment structure, allowing professionals to start small and gradually increase their contributions as they become more comfortable with the mutual fund ecosystem and their own financial organisation.
Do I need to sign physical documents to start a SIP?
In most cases, no. With the advancement of digital infrastructure in India, you can complete the entire process—from KYC to setting up the mandate—digitally using Aadhaar-based e-KYC and e-sign. Physical documents are only required if your mobile number is not linked to your Aadhaar or if you prefer a traditional paper-based application. Investably supports both digital and physical processes to accommodate the preferences of all investors, ensuring that the organisation of your documents is handled professionally.
All figures are illustrative and based on the assumed rates shown; actual returns will differ. Mutual fund investments are subject to market risks. Please read all scheme related documents carefully. Investably is an AMFI registered mutual fund distributor (ARN 188582). Investably does not provide investment advisory services.
