have a monthly salary of 42000
of which there is deduction of 8000
there is nps in that deduction of 3500 and same from employer side.
have an rd of 11000 per month
have monthly expenses of about 15000
no loans or any sort
advice on investing in sip.
Ans: You have done a good job so far. No loans, regular savings, and contribution to NPS shows financial discipline. Now, let's create a structured, long-term investment plan that suits your profile.
Understanding Your Current Financial Snapshot
Monthly salary: Rs. 42,000
Deductions: Rs. 8,000 including NPS contribution
Your NPS: Rs. 3,500
Employer NPS: Rs. 3,500
RD (Recurring Deposit): Rs. 11,000
Monthly expenses: Rs. 15,000
No loans or liabilities
This gives you a strong savings base of around Rs. 18,000 monthly. You are in a good position to begin investing through mutual funds via SIP.
Appreciating Your Current Habits
Saving over 40% of your salary every month
Investing in NPS, which supports retirement
Using RD to build a saving habit
Managing expenses very efficiently
No burden of EMI or credit card dues
These reflect strong money values and low-risk financial behaviour. Very good foundation for long-term planning.
Need to Shift from RD to SIP
RD gives very low returns over long term
After tax and inflation, RD gives negative real return
SIP in mutual funds can give better returns
SIP helps in wealth creation over the long term
For your age and surplus, SIP is more suitable
You should reduce RD amount slowly and move that money to SIPs.
Benefits of SIPs in Mutual Funds
You invest small amount every month
SIP helps in averaging market cost
Over long term, SIPs grow wealth faster
You can stop, increase or decrease SIP anytime
SIP gives better flexibility than RD or FD
You have regular income and surplus. So SIPs can become your core investment strategy.
How Much You Can Start With
Your monthly saving potential: Around Rs. 18,000
Suggested SIP amount to start: Rs. 10,000–12,000
Keep Rs. 3,000–5,000 in RD for safety
Keep Rs. 2,000–3,000 in bank account for liquidity
This balances growth with safety and liquidity.
Suggested Allocation of SIPs
A balanced SIP plan suits your risk profile and income stage.
Core Equity Allocation (Large-cap and Flexi-cap funds)
50% of SIP in stable and low-risk equity funds
This ensures consistent growth with low volatility
Supporting Growth Allocation (Mid-cap and Multi-cap)
30% of SIP in growth-oriented funds
Slightly higher risk but better long-term growth
Conservative Allocation (Hybrid or Debt funds)
20% of SIP in low-risk hybrid or short-duration debt
This adds stability and safety
So, out of Rs. 12,000 SIP:
Rs. 6,000 in core equity
Rs. 3,600 in mid/multi-cap
Rs. 2,400 in hybrid/debt fund
Keep SIPs in Actively Managed Funds
Avoid index funds.
Index funds cannot beat the market.
They copy the index and hold even bad stocks.
Index funds do not protect during market falls.
You will get only average returns.
Actively managed funds select good quality stocks.
They can reduce downside and increase returns.
For a retail investor like you, they are better.
Direct vs Regular Funds – Be Cautious
Avoid direct mutual funds.
In direct funds, you invest without guidance
There is no MFD or Certified Financial Planner to help
You miss expert advice during corrections
You may stop or switch funds emotionally
Long-term success needs professional support
Invest through regular plans via an MFD with CFP credential.
That ensures hand-holding, reviews and expert rebalancing.
Emergency Fund First
Before you go all-in with SIPs:
Keep 4–5 months of expenses in liquid fund
This acts as your emergency cushion
You should not withdraw SIPs for urgent needs
So build a buffer of around Rs. 60,000–70,000 first
After this, go full-scale on your SIP plan.
Continue NPS for Retirement
You already contribute Rs. 3,500
Employer also contributes Rs. 3,500
That’s Rs. 7,000 per month in retirement savings
Do not touch this amount till 60 years
This builds a strong base for old age
When to Increase SIPs
Increase SIP every year with salary hike
Even Rs. 1,000 per year makes a big difference
SIP step-up helps beat inflation
Use bonus or incentive to make lumpsum in hybrid funds
Avoid investing bonus fully in RD or FD
Stay consistent with SIPs for long-term growth
Key Do’s and Don’ts
Do's:
Track SIPs every 6 months
Stay invested for at least 7–10 years
Top-up SIPs yearly
Use mobile apps to track portfolio
Consult Certified Financial Planner once a year
Don'ts:
Don’t invest in index funds
Don’t go for direct funds
Don’t stop SIPs during market fall
Don’t invest without goal
Don’t treat SIP like RD
SIPs need patience and vision.
Tax Consideration – Plan Smartly
Equity mutual funds LTCG above Rs. 1.25 lakh taxed at 12.5%
STCG taxed at 20%
Debt mutual funds taxed as per your income slab
Avoid selling before 3 years
Prefer SWP or staggered withdrawal during redemption phase
With a planned withdrawal, taxes can be optimised.
Insurance Check (Just in Case)
You didn’t mention insurance. But review this:
Have term life cover of at least Rs. 25–30 lakhs
It should be pure term, no returns policy
Premium should be less than 1% of income
Have health insurance, even if you are single
It protects your investments from medical costs
Only if you have LIC, ULIP or insurance-plus-investment plans, surrender and reinvest in mutual funds.
What to Do With RD in Future
You currently invest Rs. 11,000 in RD
That is very high compared to your income
Reduce it slowly to Rs. 3,000
Shift remaining amount into SIP
RD should be only for short-term needs
Suggested Goal-Based SIP Approach
Set goals before starting SIPs.
Emergency Fund:
Liquid fund or short-duration debt fund
Wealth Creation:
SIP in flexi-cap and multi-cap equity funds
Home Down Payment (after 8–10 years):
Balanced advantage fund + equity funds
Retirement (already partly through NPS):
Equity fund SIP + NPS
This gives you a 360-degree financial plan.
Finally
You are doing very well already.
You have savings habit and no loans.
You are ready to move from RD to SIP.
This is a big step towards wealth creation.
With Rs. 12,000 SIP, you can build good wealth in 15–20 years.
Avoid index and direct funds.
Stay with active funds via regular mode and get guidance.
Follow a disciplined path with goal clarity.
Review regularly and increase SIPs yearly.
Start small but grow steadily.
SIP is your key to financial freedom.
Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment