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How to Invest in SIP

Secure your financial future with smart investment choices. Learn how to invest in SIP in India and harness the power of compounding through mutual funds. ...Read More

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How to Start SIP Investment: A Simple Guide to Wealth Creation

How to Invest in SIP
May 13, 2025

Table of Contents

 

The mounting inflation rate and cost of living compel individuals to plan for the future. Financial planning is a road map for a secure financial future. You should understand the various investment options that suit your risk appetite, financial goals, and affordability. As a novice, you can inculcate financial discipline with small investment instruments such as a Systematic Investment Plan. Alongside investments like SIPs, it's equally important to safeguard your family’s future by including life insurance in your financial plan. A life insurance policy ensures that your loved ones are financially protected in case something happens to you, while also offering savings or investment-linked benefits depending on the type of policy. Through a SIP, you can invest small amounts in mutual funds to gain high returns through compounding. Read on to understand how to invest in a SIP and how regular investing in SIP helps to achieve your long-term financial goals. 

What are Systematic Investment Plans (SIP)?

A systematic investment plan is an avenue to invest in mutual funds. Setting aside a predetermined amount at regular intervals is how to start SIP investment. You can plan to invest this amount in mutual funds at monthly intervals. You will develop a regular savings habit to benefit eventually with exponential returns. You can purchase more number of mutual fund units when the market is low and fewer units when the market is high. This helps balance the risks involved. Learning how to invest in SIP is the first step. Alongside, you should also understand how to take advantage of the market fluctuations to mitigate the associated risk. With SIPs, you can make your money work without worrying about market volatility. 

How to Invest in SIP in India?

After understanding the SIP concept, the perpetual question is how to invest in SIP. Follow the steps given below to start SIP.

Decide the Investment Amount

Consider your income, expenses, and financial goals and decide the amount you can comfortably set aside for SIP mutual funds.                 

Collect the Required Documents

Keep the required documents i.e., address proof, identity proof, and PAN ready before initiation for a seamless SIP process. 

Get Your KYC Done

Before commencing the mutual fund investment, comply with the KYC norms stipulated by the government. You can visit the nearest bank or post office where pre-paid cards are issued and fill out an application form. You can also fill out an online application. You must provide personal details like name, address, contact details, etc. You should also complete a declaration about the investment and upload a photo ID proof, such as a driving licence, PAN, etc.

Choose the Date of Your SIP

Choose a convenient date for investment before you begin SIP. Choosing multiple dates for different SIPs is permitted. 

Submit Your Form

Submit the application form after choosing the plan that aligns with your requirements.

Online process

The online SIP investment process involves the following steps:

  • Creating a new account or alternatively, if you already have an account then, logging in with the existing login credentials.

  • Providing the Know Your Customer information by filling out a form.

  • Make payment through the available payment gateways to complete the process. 

Offline process

The offline process for SIP account setup involves:

  • Visiting a designated post office or bank and filling out an SIP application form.

  • Completing the KYC process.

  • Submitting a cancelled cheque and an auto debit authorisation for an automated SIP investment.

  • To verify address and for identification, submit relevant documents such as Aadhar Card, Driving Licence, PAN, etc.

How Much Should You Invest in a SIP?

The next confusion after understanding how to invest in SIP for beginners is how much to invest in SIP.  The extent of investment in SIP plans varies with each investor. However, the minimum amount stipulated is Rs. 100/- per month. There is no cap on the maximum amount. However, you should ascertain the fixed amount you wish to invest before SIP registration. It depends on the financial goals, affordability, risk appetite, and the timeline.

Use a SIP calculator to estimate how much to invest in this monthly investment plan. You provide details of the amount, tenure, and expected return on investment to understand how much you should invest in a SIP. 

Tips to Invest in SIP

With numerous investment plans available in the market, choosing the right plan can be overwhelming. For instance, ULIPs are recommended for individuals looking for life cover and investment components. Life insurance is often a suitable option for those seeking a financial cushion for their loved ones at an affordable cost. However, the feature of investing fixed amounts comfortably at regular intervals to generate a substantial corpus over time has popularised the SIP portfolio. Now that you have an idea of how to start SIP investment, you should also consider the following tips to make the best out of this savings plan.

  • Start Early

Investing small amounts consistently for longer periods can generate significant returns over time. Starting early not only helps you stay invested for a longer period but also gives you the opportunity to build a comprehensive financial plan. This includes securing your family’s future through life insurance, which becomes more affordable when you start at a younger age. By combining disciplined investing via SIPs and adequate life coverage, you can ensure both wealth creation and risk mitigation for your dependents.

  • Choose the Right Funds

Choose the funds that align best with your risk appetite, most financial goals, and the time horizon you have in mind. The fund performance and management quality are crucial to yielding consistent returns. Consider the management quality, costs involved, and asset allocation to choose the right funds. 

  • Invest Regularly

Rupee cost averaging and compounding help your money grow exponentially. Regular SIP commitment is imperative for wealth-building. Market fluctuations should not deter your consistency. Being disciplined enables you to be on track and work towards achieving your financial goals. 

  • Assess Your Risk

Before starting a monthly SIP, you should assess your capacity to handle the market downturns.  It depends on your age, income, and financial stability. Selecting the kind of funds that are best aligned with your financial goals, affordability, and risk appetite alway helps you stay invested for a longer period and hence earn substantial returns. 

  • Stay Consistent

Stay consistent in your investment to derive better returns. Do not allow market fluctuations to divert your investment. On the contrary, diversify your SIP portfolio to minimise the losses. Opt for automated SIP deduction to maintain consistency. 

  • Protect Your Financial Goals with Life Insurance

While SIPs help you grow your wealth over time, they don't provide any financial cover to your family in your absence. This is where life insurance plays a critical role. A term insurance plan, for instance, offers a lump sum payout to your nominees if you pass away during the policy term. It ensures that your financial goals — whether it’s your child’s education, your spouse’s retirement, or paying off a home loan — remain on track even if you're no longer there to support them.

  • Use SIP Calculators

If you are confused about how much to invest, use a SIP calculator, which gives you an estimate depending on the data provided. Key in the amount, the tenure, and the return on investment expected, and the calculator arrives at the investment required to fulfil your financial goals.

Key Factors to Consider Before Starting an SIP

How to invest in SIP for the best returns becomes simpler if you consider the factors given below before you begin SIP.

  • Understand Your Financial Goals

Before you invest in SIP define your goals. It could be retirement planning, children’s education, buying a dream home, buying a car, creating emergency funds, etc. These goals often involve people who depend on you financially. Therefore, protecting your income with a life insurance policy ensures that these goals are not derailed due to unforeseen circumstances. Align the investment with your financial goals. 

  • Evaluate Your Risk Tolerance

The returns from SIP are linked to market trends. It keeps fluctuating and you may incur losses at times. You should assess your risk appetite level and invest as per your comfort level. You may choose equity funds if you have a high-risk tolerance and debt funds if your tolerance level is low. 

  • Check Your Monthly Budget

Factor in your income and expenses and arrive at the surplus available for investment. This ensures that you can sustain the monthly SIP deduction without disrupting your other needs. 

  • Choose the Right Mutual Fund

Selecting the right mutual fund is crucial before investing in SIP. Ascertain your budget, risk tolerance level, financial goals, and the returns expected. Consider the expense ratio i.e., the various fees charged, the premature withdrawal penalty, the fund performance, the track record of fund managers, etc. Investing in a mutual fund aligning with your objectives is important to achieve good returns. 

  • Set a Realistic Investment Duration

Consider the time for which you can stay invested and choose a duration accordingly. For instance, if you are planning for retirement, you may commit to stay invested for 10 years plus years. 

  • Know the SIP Amount 

Arrive at an affordable SIP amount. Even small amounts invested at regular intervals will provide significant returns over time. 

Conclusion

SIP is an investment plan that helps investors put small chunks of money at regular intervals into mutual funds of their choice. It can be overwhelming to understand how to invest in SIP. With professional assistance and guidance, you can select the right mutual funds that are best aligned with your risk tolerance level, financial goals, time horizon, as well as affordability to reap significant benefits. Remember, investing in SIPs is just one part of building a secure financial future. Equally vital is protecting your earning potential and ensuring your family’s financial safety through a well-structured life insurance plan. Together, SIPs and life insurance form a powerful duo — one builds wealth, and the other safeguards it.

FAQs on How to Invest In SIP

How do I start investing in SIP?

To start investing in SIP, complete SIP registration, fill out a KYC form, collect the necessary documents, determine the amount, choose the right mutual fund, select the date for SIP, submit the application, and make the payment.

Which SIP is best for beginners?

The best SIP for beginners depends on their risk appetite, financial goals, time horizon, and affordability. Consider the funds performance, track record of the fund managers, expense ratio, premature withdrawal penalty, etc before choosing the mutual fund. 

Can I invest 1000 ₹ per month in SIP?

Yes. You can invest Rs. 1000 per month in SIP.

What are the advantages of investing in SIPs?

The advantages of investing in SIPs are rupee cost averaging, disciplined savings, professional management, convenience, and diversification.  

How long should I keep my money invested in SIP?

The timeline for SIP investment depends on your financial goals. Staying invested for a longer term bears better returns.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Disclaimer

18. Save 46,800 on taxes if the insurance premium amount is Rs.1.5 lakh per annum and you are a Regular Individual, Fall under 30% income tax slab having taxable income less than Rs. 50 lakh and Opt for Old tax regime.

~ This is the return of the benchmark index fund and not indicative of HDFC Life Top 500 Momentum 50 fund performance (SFIN - ULIF07616/10/24Top500MoFd101). Source: https://www.nseindia.com/

** The past 5 year fund performance of HDFC Life Discovery Fund (SFIN: ULIF06618/01/18DiscvryFnd101) as on 30th November 2024. The benchmark taken into consideration here is is Nifty Mid Cap 100 which as a return of 26.77% as on 30th November 2024. HDFC Life Discovery Fund is available with HDFC Life ULIPs which comes with a life cover. Please note past fund performance is not indicative of future performance.

NOTE: This material has been prepared for information purposes only, should not be relied on for financial advice. You should consult your own financial consultant for any queries.

ARN -  MC/04/25/23246