what shd be starting investment is SIP
Ans: Starting early—even with small amounts—makes a big difference. SIP creates wealth over time with peace and discipline. Let us understand how to decide your ideal starting point for SIP investment.
? Know your monthly saving potential first
– Your SIP amount depends on your saving capacity
– Calculate income minus expenses to know the free cash
– Include EMIs, groceries, school fees, rent, and utilities
– Avoid starting SIP beyond what you can sustain for long
– Even Rs. 500 or Rs. 1,000 monthly is a good start if done early
? Begin with an amount you are confident to continue
– SIP works only if you stay consistent for many years
– Don’t start too high and stop midway under pressure
– Choose an amount that you won’t withdraw or miss
– SIP should be sustainable even during unexpected situations
– Starting with Rs. 3,000 to Rs. 5,000 monthly is healthy for most beginners
? Match SIP to your goals, not just income
– Each financial goal should have a dedicated SIP
– For example: one SIP for child education, one for retirement
– Short-term goals need different funds than long-term ones
– SIP should match the goal time frame, risk level, and purpose
– A SIP for a 2-year goal should not go into equity funds
? Do not depend on direct funds
– Direct funds do not give access to certified guidance
– You may not get reviews, hand-holding, or goal mapping
– Most retail investors lack time or tools for proper fund tracking
– Regular plans via MFDs with CFP help avoid wrong fund choices
– Regular plan may have slightly higher cost, but gives full support
– A wrong fund may cost you more than the expense ratio
? Avoid index funds when starting
– Index funds simply copy the market, they don’t protect in downtrends
– No fund manager means no smart move during market crash
– Index funds give average returns, not above-average
– They suit only informed, experienced investors with high risk appetite
– Instead, actively managed funds aim for better risk-adjusted return
– Fund managers take advantage of market opportunities to reduce volatility
? Understand the fund type before deciding SIP amount
– Equity funds need long-term SIP (minimum 5 to 7 years)
– Debt or hybrid funds suit medium goals of 3 to 5 years
– SIP in ELSS helps save tax and create wealth if held long
– SIP for emergency fund can go into low-risk liquid funds
– Goal-specific allocation improves your wealth journey
? Align SIP with salary increment
– You can begin SIP with Rs. 2,000 or Rs. 5,000 now
– Increase it by 10%–20% each year as salary grows
– This top-up SIP helps grow your investments faster
– A Rs. 5,000 SIP with yearly increment becomes Rs. 10,000 soon
– Keep SIP amount growing with income, not flat for years
? Avoid stopping SIP during market fall
– SIPs work best during market corrections
– You buy more units at lower prices
– Over time, your average cost reduces
– Market low is the best time to continue SIP
– Pausing SIP during such times stops compounding benefit
? Review SIPs every 6 to 12 months
– Track if the funds are performing as expected
– Check if the SIP is still matching your goal time frame
– Switch only if fund consistently underperforms its category
– Don’t change SIPs too often—stay long to see results
– Rebalancing helps if asset mix drifts from original goal
? SIPs are not fixed deposit replacements
– SIPs are not meant for short-term guaranteed returns
– They are goal-based, time-based wealth builders
– They carry risk, but also reward over the long run
– Don’t stop SIP because FD rates look attractive
– FD is for safety, SIP is for wealth growth
? SIP helps build retirement wealth too
– SIP can be used for retirement corpus slowly over time
– Retirement goal requires high equity allocation in early years
– SIP in balanced or hybrid funds helps reduce stress near retirement
– Begin SIP early, even with Rs. 3,000/month, and let it run long
? Don’t mix SIP with insurance products
– ULIPs and endowment plans offer low returns and high cost
– SIP in mutual funds is cleaner, more flexible, and goal-based
– If you hold old LIC or ULIP plans, review their returns
– You can surrender underperforming plans and shift to SIP-based model
– This keeps insurance separate and investments efficient
? SIP is also for women, homemakers, and children
– Housewives can invest SIP from household savings
– Minor child SIP can build higher education or marriage corpus
– SIP in mother’s name ensures future financial independence
– Don’t wait for big lump sum—start small but stay regular
? Taxes in mutual fund SIPs
– SIP in equity funds held over 1 year gets LTCG benefit
– LTCG over Rs. 1.25 lakh gets taxed at 12.5%
– Short-term gains are taxed at 20%
– SIPs in debt or hybrid funds are taxed as per your income slab
– Taxes are applied only on redemption, not during SIP running
? Emergency fund SIP can also be created
– Build Rs. 1 lakh to Rs. 2 lakh slowly for emergencies
– SIP in ultra-short or low-duration debt fund can help
– This keeps your emergency fund liquid but better than savings account
– Avoid using equity SIP for short-term emergencies
? Use certified help to plan SIP
– SIP without goal or planning may not give satisfaction
– Use guidance from Certified Financial Planner, not just random advice
– A proper plan aligns SIP with goals, time, and your risk
– It avoids over-diversification or overlapping funds
– SIP should be efficient, not complicated
? Final insights
– You can start SIP even with Rs. 500 or Rs. 2,000
– What matters more is how long and how consistently you stay invested
– Start with low amount but top it up every year
– Choose actively managed funds, avoid direct and index options
– Align SIP with goals like retirement, education, marriage, emergency
– SIP is a habit, not a product—so be patient
– Don’t mix SIP and insurance—it reduces both power and return
– Stay invested, stay guided, and review with a CFP annually
– SIP is not about market timing, but wealth timing
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment