This article will examine how to start an SIP in HDFC Bank and HDFC Securities. Firstly, we will define what an SIP is, its types, and the difference between a Stock SIP and a Mutual Fund SIP.
What is SIP Investment?
There are two types of SIP (Systematic Investment Plan) in India, namely MF SIP and Stock SIP. Here’s an explanation of both:
- MF SIP:
Mutual Fund SIP or MF SIP is a type of investment plan that allows investors to invest a fixed amount of money at regular intervals, typically monthly, into a mutual fund scheme of their choice.
The investment is made in a diversified portfolio of stocks, bonds, and other securities managed by professional fund managers.
The minimum investment amount for an MF SIP can be as low as Rs. 500, making it accessible to small investors.
The main advantage of an MF SIP is that it helps investors achieve their long-term financial goals by investing regularly in a disciplined manner.
- Stock SIP:
A Stock SIP is a type of investment plan that allows investors to invest a fixed amount of money at regular intervals, typically monthly, into individual stocks. In a Stock SIP, the investor selects the stocks they want to invest in, and the investment is made in those specific stocks at regular intervals. The investment amount is deducted from the investor’s bank account, and the shares are purchased automatically.
Stock SIPs require a lot of research and expertise as the investor needs to analyze the stocks and make informed decisions.
Stock SIPs are generally riskier than MF SIPs as they are exposed to the volatility of individual stocks.
Difference between Stock SIP and Mutual Fund SIP
Here's a table outlining the key differences between Stock SIP and Mutual Fund SIP in India:
|Aspect||Stock SIP||Mutual Fund SIP|
|Account||Demat Account (HDFC Securities)||Bank Account (HDFC Bank)|
|Definition||A systematic investment plan (SIP) in individual stocks.||A systematic investment plan (SIP) in mutual funds.|
|Investment||Investment is made in individual stocks.||Investment is made in mutual funds.|
|Diversification||Limited diversification as the investment is in individual stocks.||Diversified investment as the investment is in a basket of stocks.|
|Risk||High risk due to exposure to individual stocks.||Moderate risk due to diversification of funds.|
|Expertise||Requires knowledge and expertise in stock analysis and market trends.||Managed by professional fund managers who have expertise in stock analysis and market trends.|
|Cost||Brokerage charges and transaction fees are applicable on each stock purchase.||Expense ratio and fund management charges are applicable on mutual fund investments.|
|Liquidity||Stocks can be liquidated anytime during market hours.||Mutual fund units can be sold during trading hours, but the redemption amount is credited to the investor's account on the next business day.|
|Investment amount||Can start with a small amount.||Can start with a small amount.|
|Time horizon||Recommended for long-term investment of 5-10 years or more.||Recommended for long-term investment of 5-10 years or more.|
It's important to note that both Stock SIP and Mutual Fund SIP have their own advantages and disadvantages, and investors should consider their financial goals, risk tolerance, and investment horizon before choosing between the two.
How to Start SIP in HDFC Bank?
Here are the detailed steps to open a SIP (Systematic Investment Plan) account online, presented in a table format for easy reference:
|1||Choose a fund house that offers SIPs||Research and compare different fund houses and their offerings to select the one that meets your investment goals.|
|2||Visit the fund house's website||Go to the website of the selected fund house.|
|3||Look for the option to invest online or open an SIP account online||Look for the section that says 'Open an account' or 'Invest Online' and click on it.|
|4||Register on the fund house's website by providing your personal and contact details||Fill in the online form with your personal and contact details, such as name, address, phone number, email ID, PAN number, and bank account details.|
|5||Choose the mutual fund scheme in which you want to invest||Browse through the list of mutual fund schemes offered by the fund house and select the one that suits your investment goals.|
|6||Decide on the amount you want to invest through SIP||Determine the amount you want to invest every month through SIP.|
|7||Set up the payment mode by linking your HDFC bank account to the fund house's website and authorizing them to debit the investment amount on the specified date||Link your HDFC bank account to the fund house's website and authorize them to deduct the investment amount on a specified date every month.|
|8||Complete the KYC (Know Your Customer) process by submitting the required documents, such as PAN card, Aadhaar card, and address proof, on the fund house's website||Submit the required documents online, such as PAN card, Aadhaar card, and address proof, to complete the KYC process.|
|9||Review and confirm the SIP investment details||Review the details of your SIP investment, such as the mutual fund scheme, investment amount, and payment date, and confirm them.|
|10||Start the SIP investment by authorizing the fund house to initiate the first SIP installment from your HDFC bank account||Authorize the fund house to initiate the first installment of your SIP investment from your HDFC bank account.|
By following these steps, you can open an SIP account online and start investing in mutual funds regularly.
How to Start SIP in HDFC Securities?
Here are the detailed steps to start a Stock SIP (Systematic Investment Plan) in HDFC Securities, presented in a table format for easy reference:
|1||Open a trading and demat account||Open a trading and demat account with HDFC Securities if you don't have one already. You can do this online by visiting the HDFC Securities website or mobile app and filling in the required details.|
|2||Log in to the HDFC Securities trading account||Log in to your HDFC Securities trading account using your login credentials.|
|3||Click on the 'SIP' option||Click on the 'SIP' option from the menu bar on the trading account homepage.|
|4||Choose the stock for SIP||Choose the stock in which you want to invest through SIP.|
|5||Select the investment amount||Choose the investment amount for the stock SIP.|
|6||Set the frequency and duration||Set the frequency of investment and the duration of the stock SIP.|
|7||Confirm and authorize the SIP||Review the stock SIP details and confirm the investment by authorizing the SIP.|
|8||Maintain sufficient funds in your trading account||Ensure that you maintain sufficient funds in your trading account for the SIP installment on the specified date.|
By following these steps, you can start a stock SIP in HDFC Securities and invest in your chosen stock regularly. It is important to regularly monitor your investments and adjust your portfolio based on market conditions and your investment goals.
Q: What are the benefits of investing in an SIP in HDFC?
A: The benefits of investing in an SIP in HDFC include disciplined investing, rupee cost averaging, long-term wealth creation, and flexibility to change investment amount and tenure. Additionally, HDFC Mutual Fund is one of the top mutual fund houses in India with a strong track record of performance.
Q: How does SIP work in HDFC?
A: When you start an SIP in HDFC, a fixed amount of money is deducted from your bank account at regular intervals and invested in the mutual fund scheme of your choice. This way, you can invest a small amount of money regularly and accumulate wealth over time.
Q: What is the tenure of an SIP in HDFC?
A: The tenure of an SIP in HDFC depends on the mutual fund scheme you choose. It can range from a few months to several years.
Q: Can I change the amount of my SIP investment in HDFC?
A: Yes, you can change the amount of your SIP investment in HDFC. You can increase or decrease the amount or even pause or stop the SIP at any time.
Q: What is the maximum investment amount allowed for an SIP in HDFC?
A: The maximum investment amount allowed for an SIP in HDFC depends on the mutual fund scheme you choose. However, there is generally no upper limit on the investment amount.
Q: What is the minimum investment amount required to start an SIP in HDFC?
A: The minimum investment amount required to start an SIP in HDFC varies depending on the mutual fund scheme you choose. However, it is generally around Rs. 500 per month.
Q: How can I start an SIP in HDFC?
A: To start an SIP in HDFC, you can either visit a branch of HDFC Mutual Fund or you can do it online by visiting their website.