Hence, a brief answer to this enquiry is – No, you don't require a Demat trading account to invest in SIPs. Due to the rapid development in technology, there is no longer an obligation to have a Demat account to begin your SIP investment journey. A Demat account is required only if you wish to invest in the stock market
What Is an SIP?
SIP is a short form for Systematic Investment Plan which is an investment instrument wherein you can invest a fixed sum in a Mutual Fund at consistent intervals - for instance, once each month or once every quarter, rather than making a full investment directly.
The sum could be as little as INR 500 every month and is just like a traditional recurring deposit. SIP investment plans are very advantageous as you can give your bank thorough directions to debit the sum each month.
SIPs have been acquiring acceptance among the Indian investors, as they assist in investing in a regulated manner without stressing over market instability and timing the market.
If you are aspiring to invest in the long term, starting with the Best Mutual Funds in India is the most ideal approach. You can have a look at our recommended schemes here.
Why owning a Demat account is not compulsory to invest in SIPs?
A Demat trading account is an electronic resource that allows you to hold additional securities - all under a single roof. SEBI has set this regulation of opening a Demat account to enter the world of stock market trading. However, it is not mandatory to open a Demat account to invest in SIP investment plans.
The progression of technology has viably taken out the need of opening a Demat account for investments in Mutual Funds. You can purchase SIPs right from an AMC (Asset Management Company), an independent financial adviser, your bank, or through other online portals.
Final Thoughts
As is apparent from the above discussion, both long and short responses to the enquiry: "Is it necessary to have a Demat account to invest in SIP?" is a big "NO."
Using a Demat account is optional and completely up to your discretion.
Now that all your burning questions regarding SIPs are answered, we'd like to wish you the best for your SIP investment journey! Start an SIP with us today.