How to Start SIP Investments in UAE

Want to invest in mutual funds but don’t wish to put a large sum at a time? 

Systematic Investment Plans or SIPs, highly popular among investors, can be the ideal solution for this. Instead of putting all your money in a mutual fund, you can invest in small amounts at regular intervals. 

However, considering the sheer number of SIP options in both the UAE and outside, it becomes essential to understand how to invest in SIP.

How Does an SIP Work?

Before understanding how to start SIP, let’s quickly understand how this investment instrument works.

When you start an SIP, a fixed amount of money is automatically deducted from your registered bank account. The frequency of SIP can be monthly, quarterly, half-yearly, or yearly. 

This amount is invested by a mutual fund company in a fund periodically. 

How Can I Start SIP Investment?

Let’s understand the process of investing in SIPs as per the country you are investing in — 

In the UAE 

With the top banks in the UAE, you can easily invest in both local and global mutual funds via SIP. Here’s how to start SIP investment —

• Check whether a particular bank offers SIPs in your chosen mutual funds.
• Open an investment account with a bank.
• If required, create a profile for your investment.
• Once done, decide how much you want to invest in SIP at regular intervals (monthly or weekly). This will depend on your financial goals and how much you can afford for an investment.
• Select an SIP date. This can be a date around the time when you get your salary or any other one you’ve in mind.
• Inform your provider that you want to invest in SIP. 
• Follow the prompted steps — this can be done online or by filling and submitting SIP forms as well. 
• Start investing! 

Note that some documents may be required during the application process such as Emirates ID.

Overseas 

While the UAE has plenty of mutual fund options, you can also invest in any other country’s market as per your goals. In this case, you will need to check the specific requirements of the concerned area.

For investing in India, here’s how the process goes — 

• Since you cannot invest in mutual funds in India in foreign currencies, you will need to open any of the following accounts —
  • Non-Resident (External) Account (NRE account) — tax-free account 
  • Non-Resident Ordinary (NRO) (NRO account) — taxes applicable to earned interest
• Decide how to invest in mutual funds through SIP. You can invest directly or through Power of Attorney (PoA). 
• Choose a mutual fund company and complete the KYC — this will depend on how you choose to invest. The documents and details required may include:
  • Passport
  • Residential address
  • Date of birth and more
• Select a mutual fund and inform the company that you wish to invest via SIPs.
• Decide the SIP date and amount and confirm the details.

Things to Consider Before Investing in SIP

While it’s important to know how to invest directly in SIP, it’s also crucial to be aware of some more factors to get the most out of your investment. 

• Lock-in Period: Most SIPs don’t have any lock-in period. However, mutual funds like ELSS funds have such features. So before investing, check whether your fund has any lock-in period. 
• Exit Load: Most SIPs have an exit load, which applies if you withdraw or stop your investment before a certain tenure. As this can cut down a part of your profits, make sure to look at the exit load before investing.
• Risk Appetite: When you choose an SIP, take your risk tolerance into account. For instance, if you can bear high risk for potential gains, you can go for SIPs in small cap or contra mutual funds. 
• Investment Horizon: Consider your investment horizon, which refers to the time frame you aim to invest in.

SIPs are usually taken for a long time frame. While they can generate significant wealth over time, they may not give high returns in the short run. Thus, it is recommended to commit to an SIP only if you are looking to invest for 5-10 years or more. 

Important: To visualise your potential returns, you can check the previous returns* of your chosen SIP and enter the details in an SIP calculator.

*For reference only — past performance does not guarantee future returns

Frequently Asked Questions