You can set up stock SIPs with weekly, fortnightly, monthly, or daily frequencies by selecting multiple dates at regular intervals. If your stock SIP date falls on a holiday, your orders will be executed on the next trading day.
The Quick Answer
Yes, you absolutely need to have sufficient funds in your Zerodha account for your stock SIPs to execute successfully. Unlike mutual fund SIPs that can pull money directly from your bank account, Zerodha’s stock SIPs will only use the funds already available in your trading account.
As someone who’s been using Zerodha’s stock SIP feature for a while now, I can tell ya that understanding how the funding works is crucial to make sure your investment plan stays on track without any hiccups.
Understanding Stock SIPs on Zerodha
Stock SIP (Systematic Investment Plan) on Zerodha lets you invest a fixed amount at regular intervals in stocks of your choice. It’s basically the stock market version of mutual fund SIPs, but with more control over what exactly you’re buying.
How Stock SIPs Differ from Mutual Fund SIPs
Before we dive deeper, it’s important to understand a key difference
- Mutual Fund SIPs: These typically pull money directly from your bank account through auto-debit
- Zerodha Stock SIPs: These ONLY use funds already available in your Zerodha account
This difference is critical because if you don’t have enough money in your Zerodha account when your stock SIP is scheduled to execute, the order will fail.
Funding Your Zerodha Stock SIPs
Manual Funding Method
The basic approach is to manually transfer funds before each SIP date:
- Check your SIP schedule
- Transfer money to your Zerodha account 1-2 days before the scheduled date
- Ensure sufficient balance on the day of execution
This works fine if you have just one or two SIPs or if they’re all scheduled for the same day. But if you’ve got multiple SIPs running on different dates, it can become a headache to keep track.
Automating Your Funding with e-Mandates
To make life easier, Zerodha offers a solution through e-Mandates on Console. This feature allows you to automate the funding process:
- Set up an e-Mandate on Console
- Link it to your bank account
- Schedule automatic fund transfers aligned with your SIP dates
As Zerodha clearly states: “To automate funding from your bank account to your Zerodha account for Stock SIPs, use the e-Mandates feature on Console.”
The e-Mandate feature is a lifesaver for regular investors, ensuring you never miss a SIP due to insufficient funds It’s like setting up an automatic pipeline from your bank to your trading account.
Creating a Stock SIP on Zerodha Kite
Let me walk you through the process of setting up a stock SIP on both the Kite app and web platform:
On Kite Mobile App
- Tap on “Orders”
- Tap on “SIPs”
- Tap on “New SIP”
- Enter your SIP name
- Link an existing basket or create a new one by tapping “New basket”
- Select your basket and set your preferred scheduled date and time
- Swipe on “Create”
On Kite Web Platform
- Click on “Orders”
- Click on “SIP”
- Click on “New SIP”
- Enter your SIP name
- Link an existing basket or create a new one by clicking “New basket”
- Select your basket and set your preferred scheduled date and time
- Click on “Create”
Scheduling Options for Your SIPs
When it comes to scheduling, Zerodha offers flexibility but with some limitations:
- You can set up to 5 schedules for any day of the month
- Time slots available are from 9:30 AM to 3:00 PM with 30-minute intervals
- Each time slot allows only one SIP per day
- You cannot specifically select weekly or monthly schedules, but you can choose specific dates
If your scheduled date falls on a holiday, don’t worry – your SIP order will be sent to the exchange on the next trading day. Similarly, if you schedule for the 31st of a month that doesn’t have 31 days, the order will execute on the next available trading day.
Important Things to Remember About Zerodha SIPs
Here are some crucial points to keep in mind:
- You can place a maximum of 50 SIPs
- You’ll get a reminder email one day before your scheduled SIP date
- Corporate actions like dividends, splits, and category changes won’t automatically modify your SIP schedules
- Stock SIPs are completely free – Zerodha doesn’t charge additional fees (just the regular brokerage fees)
Practical Tips for Managing Your SIP Funds
As a regular Zerodha user, I’ve learned some practical strategies for managing SIP funds:
1. Create a Buffer
I always try to maintain a small buffer amount in my Zerodha account beyond my SIP requirements. This ensures that even if a stock price increases slightly, my SIP can still execute.
2. Set Calendar Reminders
Even with e-Mandates, it’s good practice to set calendar reminders to check your account balance before SIP dates. This has saved me from several potential failed orders.
3. Consolidate SIP Dates
To simplify fund management, I’ve found it helpful to schedule multiple SIPs on the same day or close dates. This way, I can make a single larger transfer instead of multiple smaller ones.
4. Monitor Your e-Mandate Limits
If using e-Mandates, regularly check that your mandate limit is sufficient for your growing SIPs. As you increase your investment amount, you might need to update your mandate limits.
Common Questions About Funding Zerodha SIPs
Can I set up recurring bank transfers directly through Zerodha?
Yes, through the e-Mandate feature on Console. This allows automatic fund transfers from your bank to your Zerodha account.
What happens if I don’t have sufficient funds?
If there aren’t enough funds in your Zerodha account when the SIP is triggered, the order will simply fail to execute. You won’t be penalized, but you’ll miss that investment cycle.
Is there a minimum amount needed for stock SIPs?
There’s no specific minimum set by Zerodha for SIPs, but you’ll need enough to buy at least one share of the company you’re investing in, plus applicable charges.
Can I use margins for my stock SIPs?
No, stock SIPs can only be used for delivery trades in the cash market. Margin trading is not available for SIP orders.
My Personal Experience with Zerodha SIPs
When I first started with Zerodha SIPs, I made the mistake of assuming they worked exactly like mutual fund SIPs. I had scheduled several SIPs without adding funds to my account, and naturally, they all failed.
Now, I use a combination of e-Mandates and manual funding. For my core investments, I have e-Mandates set up to automatically transfer funds before the SIP dates. For occasional or experimental investments, I prefer the manual approach so I can review them before each execution.
I’ve found that keeping a monthly calendar with all my SIP dates marked has been super helpful in making sure I never run short of funds.
Conclusion
To sum it all up – yes, you definitely need to add funds to your Zerodha account for your stock SIPs to execute successfully. Unlike mutual fund SIPs, Zerodha’s stock SIPs don’t pull money directly from your bank account.
The best approach is to:
- Use e-Mandates to automate fund transfers
- Keep track of your SIP schedules
- Maintain sufficient balance in your Zerodha account
- Check your account before SIP dates
By following these steps, you’ll ensure your investment plan stays on track without any funding-related interruptions. Remember, consistency is key to successful SIP investing, and proper fund management is crucial to that consistency.
Happy investing, and may your SIPs bring you wealth over time! Just remember to keep that Zerodha account funded, or your SIPs won’t go anywhere.
Setting up your SIP
- Click on Orders and then on SIP.
- Click on Create new SIP.
- Click on Create basket or on + New basket.
- Enter the basket name, and add the instruments to the basket.
- Click on Back to SIP.
- Enter the SIP name and select the basket.
- Select the Date and Time.
- Click on +Add and select a date with a weekly, fortnightly, monthly or daily interval.
- Click on Create.
Creating daily SIPs and managing them is cumbersome. More importantly, if your goal is to invest regularly, there is no difference in returns between a daily, weekly or monthly SIP. A better approach is to add up the amount you need to invest and create a weekly SIP instead. This makes it easier to track and manage multiple SIPs. Learn more by visiting tradingqna.com/t/is-daily-sip-better-than-monthly/138135.