How to Invest in SIP - Steps to Start Investing in 2024 (2024)

The best SIP (Systematic Investment Plan) for beginners depends on individual financial goals and risk tolerance. Generally, starting with a well-diversified equity mutual fund with a good track record can be a prudent choice for long-term wealth creation.

For beginners looking to invest in SIPs, there are several good options to consider. The Quant Active Fund, a multi-cap fund with 40% growth and 60% value stocks, manages assets worth Rs. 3,480 crore and primarily invests in pharmaceuticals, consumer staples, and materials. Since its launch on January 1, 2013, it has delivered average annual returns of 21.17% with an expense ratio of 0.58%. Another option is the PGIM India Flexi Cap Fund, which has been around since 2015 and invests in equity and debt markets. With an AUM of Rs. 5,291 crore, it focuses on sectors like financial services, automobiles, and technology, yielding an annualised return of 14.91% with an expense ratio of 0.31%.

Additionally, the Parag Parikh Flexi Cap Fund is a balanced fund investing in equity and debt, with Rs. 28,546 crores in AUM and preferred sectors like financial services, technology, consumer staples, and energy. Since its inception on May 13, 2013, it has delivered average annual returns of 18.88%, although it has a higher expense ratio of 0.76%.

For a more diversified approach, the Kotak Equity Opportunities Fund invests across equity and debt markets with an AUM of Rs. 11,662 crore and focuses on energy, capital goods, and chemical sectors. It has provided consistent annualised returns of 16.68% since 2013 and has an expense ratio of 0.59%. These funds are suitable for new investors as they offer growth potential and stability besides charging manageable costs.

Yes, you can start investing with as little as Rs. 100. In mutual funds, you can begin with a small amount and still build wealth over time. However, properly research the funds you want to invest in. Also, be consistent and diversify your investments to spread out the risk. By being patient and focusing on long-term growth, you can create a sizeable corpus despite starting with only Rs. 100 per month.

SIP is considered a good investment strategy for long-term financial goals. It offers benefits like rupee cost averaging and the power of compounding, making it a disciplined and effective way to accumulate wealth. However, the choice of the specific SIP and its performance can impact the overall results, so research and diversification are key.

Yes, you can withdraw from your SIP investments at any time. However, the ease of withdrawal and any associated charges may vary depending on the mutual fund scheme and its terms. It's advisable to check the fund's exit load, if any, and consider your investment horizon before making withdrawals to optimise returns and meet your financial goals effectively.

Investing in a SIP (Systematic Investment Plan) is simple. Choose a mutual fund, set your investment amount, and select the frequency (monthly, quarterly, etc). Here’s how to go about it.

Step 1: Set a target
The first step that you ought to take is deciding how much you want to earn via SIPs. Once you know the desired amount, move on to step two.

Step 2: Decide the amount
This step involves judging your current income and expenditure and deciding how much you will contribute to SIPs monthly. The best part is that you can increase the amount later on if you wish to. To start with, you can invest as little as Rs. 100 too.

Step 3: Decide the tenure
Based on the amount that you can invest, select an appropriate tenure. Remember that the benefits of rupee cost averaging and compounding interest are highest when you stay invested for a long duration. You can use a SIP calculator to decide this parameter accurately.

Step 4: Select an SIP
This is the most critical consideration. Research your options thoroughly and discuss them with a financial advisor. This way, you will be able to select the best SIP that caters to your financial goals.

SIP doesn't offer a fixed interest rate because it involves investing in mutual funds, which are market-linked. Your returns depend on the performance of the underlying assets in your chosen mutual fund.

You can start a SIP at any time, and it's generally a good practice to invest consistently regardless of market conditions. SIP's rupee cost averaging feature helps you benefit from market volatility.

There is typically no upper limit on SIP investments. However, the maximum amount you can invest may depend on your chosen mutual fund and your financial capacity.

A. SIP (Systematic Investment Plan) investing is generally considered safer than lumpsum as it spreads investments over time, reducing the impact of market volatility. However, like any investment, it carries inherent market risk.

To determine how much you should invest in a SIP, aim to save at least 30% of your gross income. For example, if your gross income is Rs. 2,00,000 per month, try to save and invest Rs. 60,000 each month.

A useful rule of thumb for deciding how much to invest in equity (through mutual funds) is to subtract your age from 100. The result is the percentage of your savings that you should invest in equity. For example, if you are 30 years old, you should consider investing 70% (100 - 30) of your savings in equity mutual funds. This approach helps balance your investments according to your age and risk tolerance.

Investors typically miss their SIP instalments due to insufficient balance in their bank account for the automatic debit. Usually, the mutual fund company or broker won't penalise you for such a default, and there are no severe consequences. However, your bank might charge you a fee for not maintaining sufficient funds and for missing the ECS (Electronic Clearing Service) auto-debit payment.

SIPs are not completely risk-free because they invest in a variety of securities, including stocks, which are known for their volatility. This means that stock prices can fluctuate significantly, thereby making SIP investments risky. However, SIPs mitigate some of this risk by spreading investments over time. Also, this approach of regular investing reduces the risk of investing a large sum at once during market highs.