Investing in a SIP (Systematic Investment Plan) without a broker or financial advisor is known as investing in a ‘Direct Plan’. The main advantage of this approach is that you don’t pay any commission to a broker, which leads to a lower expense ratio for your scheme and ultimately higher returns in the long run.
Here’s how to invest in a SIP without a broker:
1. Complete Your KYC (Know Your Customer)
KYC is mandatory for investing in mutual funds and is a one-time process.
- Online: You can complete Aadhaar OTP-based e-KYC online. For this, your mobile number must be linked to your Aadhaar card. You can do e-KYC through various KYC Registration Agencies (like Karvy, CAMS) or directly on the Asset Management Company (AMC) website.
- Offline: You can also visit the office of the Fund House or a Registrar and Transfer Agent (RTA) like CAMS or KFintech (formerly Karvy Fintech) and submit the required documents (PAN card, Aadhaar card, address proof copy, passport-sized photo) to complete your KYC.
2. Choose the Right Direct Mutual Fund Scheme
Investing without a broker means you’ll need to do your own research.
- Define Your Goals: What are you investing for (e.g., retirement, child’s education, buying a home)? What’s your investment horizon, and how much risk are you willing to take?
- Select a Fund: Visit the websites of various AMCs (e.g., SBI Mutual Fund, HDFC Mutual Fund, ICICI Prudential Mutual Fund). Look for their ‘Direct Plan’ option. Thoroughly analyze various fund’s performance, expense ratios (which will be lower for direct plans), fund managers, and the fund’s portfolio (where it invests).
3. Invest Directly
There are a few main ways to start a SIP directly without a broker:
-
Directly via the Asset Management Company’s (AMC) Website:
- Go to the website of the specific AMC whose fund you wish to invest in.
- Create a new account on their website. You’ll need your PAN number, bank account details, and KYC information.
- Select the fund scheme (e.g., Equity Fund, Debt Fund, Hybrid Fund) and ensure you choose the ‘Direct Plan’ option. Selecting ‘Regular Plan’ will include broker commissions.
- Choose the ‘SIP’ option, set your monthly investment amount, and the SIP date (which day of the month the money will be debited from your bank account).
- Make the first installment payment via UPI or Net Banking. For subsequent installments, you might need to set up a NACH mandate (National Automated Clearing House), which requires you to authorize automatic deductions from your bank account.
-
Via Registrar and Transfer Agent (RTA) Websites:
- The two main RTAs in India are CAMS and KFintech.
- These websites allow you to invest in funds from various AMCs through a single platform, which is convenient.
- Here too, you’ll need to create an account, complete KYC, and choose the ‘Direct Plan’ for your preferred fund scheme.
- The process for setting up a SIP is similar to that on an AMC’s website.
-
Through Online Direct Mutual Fund Platforms:
- Some online platforms specifically offer ‘Direct Mutual Funds’ and do not charge any commission (e.g., Kuvera, Groww, Zerodha Coin, Paytm Money).
- These platforms provide a user-friendly interface that simplifies your research and investment process.
- You’ll need to open an account on these platforms and complete KYC.
- Then, you can start a SIP in your chosen direct fund scheme.
4. After Investing:
- You’ll receive regular statements from the AMC or RTA for your investments.
- You can use various online platforms or apps to track your investments.
- Regularly review your portfolio and make changes if necessary.
Important Considerations:
- Educate Yourself: Investing without a broker means you’ll be responsible for your own research and decisions. It’s crucial to gain knowledge about various funds.
- Patience and Discipline: SIP is a long-term investment strategy. It’s vital to invest regularly without getting discouraged by market volatility and to remain patient.
- Expense Ratio: ‘Direct Plans’ have a lower expense ratio than ‘Regular Plans’, which helps increase your returns. This difference can amount to a significant sum in the long run.
Investing in a SIP directly without a broker is financially cost-effective and gives you greater control over your investments. However, it requires some time and research on your part.
