Here is how you start investing in systematic investment plans


Indian investors have reasons to increase their SIP (Systematic Investment Plan) investments in recent times, with SIP inflows exceeding ₹15,000 crore for the first time in 2023. Several investors in India are now opting for SIPs as their preferred mode of investment.

A stepwise procedure that investors can follow before making an SIP investment:

  • Investors must decide on an investment goal and analyse their risk tolerance:

The first step in starting an SIP investment in top mutual funds is to define investment goals. An investor’s goal can be buying a house, planning for their child’s education, or building a retirement corpus. Simultaneously, they must assess their risk tolerance and determine how comfortable they are with market fluctuations and losses. This assessment will guide investors in selecting SIPs with appropriate risk profiles.

  • Investors must research mutual fund schemes online:

Since numerous mutual fund schemes are available in the market, investors must conduct thorough research before choosing them. An investor can begin by exploring mutual fund companies’ websites and comparing various schemes; and noting their historical performances, fund manager’s track record, and their underlying assets. This research helps investors shortlist schemes that align with their investment goals and risk tolerance.

  • Investors should use an SIP calculator to plan for their SIP investment in advance:

An SIP calculator is a valuable tool that helps investors calculate the potential returns on their investments. They can estimate the future value of their investments by entering details like their investment amount, SIP frequency, expected rate of return, and investment horizon. This information will aid investors in setting realistic financial goals and determining their SIP amount.

  • Investors must decide on an investment horizon:

An investor’s investment horizon is the duration for which they plan to stay invested. Investment horizons can vary based on an investor’s goals and risk tolerance. Short-term goals may require a shorter investment horizon, while long-term goals, such as retirement planning, may demand a longer horizon. Selecting an appropriate investment horizon is crucial, as it directly impacts an investor’s choice of SIP scheme and asset allocation.

  • SIP investments must be regularly assessed and changed if required:

As financial circumstances change, if an investor achieves their goals ahead of schedule, they can adjust their SIP investments accordingly. They must periodically review their portfolios and make necessary changes to stay aligned with their evolving objectives.

  • Investors must check the expenses of a mutual fund scheme before investing:

Investors must know the expenses associated with their mutual fund scheme. These expenses include fund management fees, distributor commissions, and other operational costs. Lower expense ratios can significantly impact their overall returns in the long run; so investors must opt for funds with competitive expense ratios.

What are the advantages of SIPs over the lump sum mode of mutual fund investment?

SIPs instill a disciplined approach to investing. Investors cultivate a habit of saving and investing irrespective of market conditions by committing to regular investments. On investing a fixed amount at regular intervals, investors buy more units when prices are low and fewer units when prices are high. This strategy, known as rupee cost averaging, helps reduce the impact of market fluctuations.

Investing is a long-term endeavour, and patience and discipline are crucial for reaping the benefits of SIPs in the upcoming years. Investors can successfully grow their wealth by following the stepwise procedure outlined above and understanding the advantages of SIPs.

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