SIP’s ABCD: New investors can also easily invest money, just keep these 6 things in mind – How to start sip in mutual funds and key points to remumber

Mutual Fund sip: Stock market volatility or stability, Systematic Investment Plan (SIP) is always considered an effective way to make money. But, many investors are confused that how to start SIP that it is right and effective? Let’s know the practical and professional method of starting SIP, which everyone can adopt.

First decide the target of investment?

The first and most important step to start SIP is to decide the purpose of investment. This purpose can be anything. Such as retirement funds, children’s education, buying a house or just capital formation. Once the target is set, it becomes easy to fix its duration and amount.

Understand risk profiles

Each investor has a different ability to bear the risk. Fund is selected on this basis. Let’s know which investor should choose what fund:

• Debt or hybrid funds for low -risk investors.
• Flexi cap or large cap fund for moderate -risk investors.
• Small cap or mid -cap fund for high risk -likes.

Flexi cap fund is a balanced option for new investors, as it adjusts itself according to the market.

How to choose the right SIP amount and platform?

SIP can also be introduced with small amounts like ₹ 500, but it depends on how much the investor’s income and expenses are. Investors can also increase SIPs every year, called step-up SIP.

If we talk about the platform, then today many confident digital mediums are available. Such as Zerodha Coin, Groww, Paytm Money or direct Mutual Fund House website. These include “Direct Plan” less expensive and returns are better.

KYC and Bank Auto-Debit

The KYC process has to be completed with PAN, Aadhaar and Bank details before starting SIP. After this, the investor has to allow auto-debit through e-mandate. With this, every month the fixed amount of SIP would be deducted from your account automatically.

What are the things to keep in mind while doing SIP?

1. The real advantage of SIP is available when you invest for at least 5-10 years. This provides benefits of both compounding and market fluctuations.
2. Review your SIP amount every year. If SIP is getting good returns, then top-up the SIP so that the return can also increase.
3. Do not stop SIP by panic when the stock market falls. At this time more units are available which give good returns in a long time.
4. Before starting SIP, keep an emergency fund of 3-6 months ready, so that you do not have to break the investment when needed.
5. Before starting the SIP, the fund’s 5-10 years performance, the stability and credit rating of the fund manager must be seen.
6. While investing in SIP, keep information about the taxable limit and long term capital gains of Equity and Debt Funds, so that tax planning is easier.

Keep an eye on SIP with long -term perspective

SIP is a long term investment medium. So it is not right to react to every small decline. Do review the performance of funds every 6 to 12 months, but do not stop SIP. Remember, the real effect of compounding is seen over time.

However, if not doing well for a one or two years, or giving a low return compared to Sensex and Nifty, review it. You can also consider changing the fund house with the advice of a financial advisor.

Also read: ITR Filing 2025: CA will not be needed to file income tax returns, know the full process here

Disclaimer: Here information provided is being given only for information. It is necessary to mention here that the investment market in the market is subject to risks. Always consult experts before investing money as an investor. There is never advice to anyone to invest money on behalf of Moneycontrol.