Author
LoansJagat Team
Read Time
5 Min
11 Jun 2025
How to Start SIP Investment – A Step-by-Step Guide for Beginners
Ram, a 30-year-old software engineer with a monthly salary of ₹75,000, wants to start a Systematic Investment Plan (SIP) to generate wealth for the future. After accounting for expenses, he is able to invest around ₹13,000 a month in mutual funds.
Ram’s goal is to build wealth over 10 years or more with minimal risk. This blog will guide him, and readers like him — through starting SIP, choosing the right funds, and making the most of their investments.
Understanding SIPs: How They Work and Why Ram Should Invest?
A Systematic Investment Plan (SIP) is a disciplined approach to mutual fund investing that involves contributing a certain amount at regular intervals (monthly/quarterly). It is helpful in:
Benefits of SIP
Why is SIP ideal for Ram?
- He enjoys a regular monthly salary of ₹75,000.
- He can make steady investments without trying to time the market.
- His long-term horizon (10+ years) enables compounding to work.
Example: If Ram invests ₹13,000/month at 12% annual returns, his corpus after 10 years would be:
Year | Total Investment | Estimated Value (12% CAGR) |
5 | ₹7,80,000 | ₹10,50,000 |
10 | ₹15,60,000 | ₹30,02,000 |
15 | ₹23,40,000 | ₹65,80,000 |
Step-by-Step Guide: How Ram Can Start His SIP?
Step 1: Complete KYC & Choose a Fund House
Ram will need a few important documents:
- PAN card
- Aadhaar-linked bank account
- Passport-sized photo
He can register via:
- AMC websites (e.g., SBI MF, ICICI Prudential)
- Online platforms (Groww, ET Money)
Some of the recommended Fund Houses for Ram:
Fund House | Minimum SIP (₹) | Top Performing Fund |
SBI Mutual Fund | 500 | SBI Small Cap Fund |
ICICI Prudential | 1,000 | ICICI Bluechip Fund |
HDFC Mutual Fund | 500 | HDFC Index Fund |
Step 2: Select the Right Mutual Fund
Based on Ram’s risk appetite (moderate) and goal (long-term growth), he should consider:
Fund Type | Risk Level | Expected Returns | Suitable for Ram? |
Large-Cap Equity | Moderate | 10-12% p.a. | Yes |
Flexi-Cap Fund | Moderate-High | 12-15% p.a. | Yes |
Index Fund | Low | 10-11% p.a. | Yes (for stability) |
Step 3: Determine SIP frequency and amount.
Although monthly SIPs are the most prevalent, several platforms also support weekly or quarterly SIPs. Monthly, the pattern is best suited to salaried individuals such as Ram.
Ram's Ideal SIP Allocation Plan
Fund Name | Fund Type | SIP Amount (₹) | Reason |
ICICI Prudential Bluechip Fund | Large Cap | ₹4,000 | Stable but large-cap investments |
Parag Parikh Flexi Cap Fund | Flexi-Cap | ₹4,000 | Dynamic fund with domestic + global assets |
HDFC Index Fund – Nifty 50 | ₹3,000 | Low-cost passive investment | |
Mirae Asset Tax Saver (ELSS) | Tax Saving | ₹2,000 | Save taxes under Section 80C |
Total | — | ₹13,000 | — |
Step 4: Automate and track your SIPs.
Once SIPs are operational, Ram should set up auto-debit instructions from his bank account. This assures that he never misses a date.
He should also:
- Every 6-12 months, monitor the fund's performance.
- Tracking apps include Kuvera, Coin by Zerodha, and ET Money.
- Avoid terminating SIPs when the market falls instead, invest more if possible!
SIP Myths That Ram Should Ignore
Myth | Reality |
SIPs are just for specialists. | Even first-time users can start SIPs in minutes |
You need a large amount to invest | Start with ₹500 every month |
SIPs provide assured returns | No, these are market-linked assets. |
Stopping SIPs during a market fall | Big mistake: declining markets help with rupee cost averaging. |
One fund is enough | Diversification lowers risk and increases profits. |
What should Ram avoid when investing?
Even if SIP is beginner-friendly, there are certain risks:
- Relying on past performance does not guarantee future results.
- Frequent withdrawals reduce compounding advantages.
- Ignoring expenditure ratio: High-fee funds reduce returns.
- Over-diversification: More than 5 funds result in unnecessary overlap.
SIP vs Lump Sum: What Should Ram Choose?
Ram considered investing his annual bonus of ₹1,00,000. Should he invest it immediately?
Feature | SIP | Lump Sum |
Market Timing | Not necessary (averaged out) | Requires timing skills |
Risk | Lowers risk | Higher during the market peak |
Best for | Ideal for salaried professionals | Investors with a large corpus |
Emotional Control | Improved emotional control through discipline. | Difficult to manage emotions |
SIP Taxation Rules
- For equity funds held for more than a year, 10% LTCG is applicable on gains exceeding ₹1,00,000 per year.
- ELSS Funds: 3-year lock-in period + Section 80C benefit (up to ₹1,50,000 deduction).
- Dividends: Taxable according to Ram's income slab.
Success Story to Motivate Ram
Consider Ankit, a 35-year-old who started a monthly SIP of ₹10,000 in 2010.
Total investment (until 2020): ₹12,00,000.
Final Corpus at 12% CAGR: ₹23,20,000
The current SIP value (2025) is ₹45,00,000.
Today, he owns a home and plans to retire at 45. What's the secret? Consistent SIPs plus patience.
Conclusion
Ram, like many young earners, wants financial security and wealth creation. SIPs offer him a simple, structured, and powerful way to achieve that without stress or speculation.
With just ₹13,000/month, patience, and the right fund choices, Ram can build a ₹65–70 lakh corpus in 15 years. More importantly, he’ll gain peace of mind knowing his future is secured one monthly step at a time.
“SIP karo, future secure karo!”
Frequently Asked Questions (FAQ)
Is SIP safe for beginners?
Can I change or stop my SIP at any time?
When is the optimum time to start SIP?
Now! The earlier you begin, the more time your money has to grow.
Do SIPs provide fixed returns?
No, returns are market-linked, although mutual funds have typically delivered 10-15% over the long run.
What if the market crashes?
Continue SIPs! Crashes allow you to buy additional units inexpensively, improving long-term gains.
About the Author
LoansJagat Team
We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?
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