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Planning for Mutual Fund SIP Investment

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A LOT of investors give direct instructions to mutual funds for regular investments like a systematic investment plan (SIP) that they might have started. This is meant to ensure that investors save time so that they do not have to worry about payments at regular intervals. At the same time, direct transfer of money from the bank will ensure that the process is completed automatically. However, there are a lot of practical difficulties that come up if the investor avails the SIP route, and hence, the investor needs to be aware of several concerns.


Rejected: There are times when instructions that are given to the mutual fund are rejected and the investor finds that a particular instalment has not gone into the fund. Missing out on an investment opportunity is one thing, but, there is also a bigger risk that the mutual fund might even terminate the related transactions and the entire process could come to an end. If this happens, then the investor would have to make special efforts and start the entire process all over again. However, there are some small steps that can be taken to ensure that this does not happen, and, here are a few of them.


Check bank balance: The first thing that the investor has to do is to check that there is adequate money in the bank account when the date for the investment nears. It's possible that just before the due date of the payment, there is some other cheque that comes up for payment with the end result that the balance is depleted when the investment date comes up and this could lead to a rejection of the payment instruction. This happens on numerous occasions and the investor should not forget this detail and ensure that there are adequate funds in the bank account.


Bank instructions: There are several details of the bank account that have to be provided to the fund house and these have to be checked for accuracy. The investor must also check to see if the payment will be going from the right bank account. At the same time, there are also instructions to the bank that will have to be reviewed, so that the process is carried out in a proper manner. Rechecking at regular intervals will ensure that investment instructions are followed to avoid headaches later.


Fund confirmation: It is also essential that the investor is able to confirm the transaction when it occurs from the mutual fund because this will prove that the payment has actually been made.

Usually, the fund sends an SMS or an email confirming the transaction has been completed within the due date. This would ensure peace of mind. All these small steps would ensure that your investment goals are being met as per your instructions.
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