How to Start SIP (Systematic Investment Plan) in India: A Beginner’s Guide

More and more Indians are opting for mutual funds as a result of Systematic Investment Plans (SIPs) becoming more available in recent years. With the increased accessibility of financial planning services, people are discovering SIPs as a viable investment tool that allows for wealth accumulation over time while requiring minimal upfront investment. For all the beginners who are wondering how to get started, this guide covers everything you need to know including the definition of SIPs to the steps you’ll need to take to open one today.

What is a Systematic Investment Plan (SIP)?

A SIP is a method of investment in which a fixed amount is invested in a mutual fund scheme at regular intervals, generally on a monthly basis. Instead of a lump-sum investment, you make a series of smaller contributions which helps instill a culture of consistent saving while minimizing the impact of market fluctuations. With time this approach takes advantage of the benefits that come from the ‘rupee cost averaging’ and compounding strategies, allowing you to steadily grow your wealth.

Why Should You Start an SIP?

• Low Entry Barrier – SIPs are accessible for all and in this case, you are eligible to begin with only ₹500 monthly installments.
• Disciplined Savings – SIPs facilitate the automatic monthly withdrawal from your bank account.
• Market Volatility Protection – Risk is minimal thanks to the time-phased spread of investment.
• Compounding Benefits – The wealth accumulation for long term SIPs taken out is significant as returns are reinvested.

Also Read: How to Improve Your CIBIL Score Fast in 2025

Starting a SIP in India: A Step-by-Step Guide  

1. Financial Objectives  

Start with setting your objectives.  Is it a short-term goal (2-3 years) such as buying a car, or a long-term goal (10+ years) such as a retirement fund?

2. Assess Your Risk 

If you prefer stability, go for debt funds. You may also look at hybrid funds for a blend of both.  

3. Choose the Right Mutual Fund  

Conduct research on the schemes by looking at their performance history, the fund manager’s track record, and the expense ratio. Other common fund types are large-cap, mid-cap, and index funds.  

4. KYC  

This is a requirement to invest in mutual funds. KYC can be done remotely through e-KYC with PAN and Aadhaar details.  

5. Open an Account  

You can go through credible companies like Groww, Zerodha Coin, Paytm Money, or go directly to the AMC website.  

6. Decide SIP Amount & Tenure  

Determine your expected corpus, and use an SIP calculator to ascertain the monthly contribution.  

7. Automate Payments  

Enable ECS mandate or UPI auto-debit for the necessary amount.  

Best Practices for SIP investment  

• Increase your SIP amount each year (Step-up SIP).  
• Start and stay invested for a minimum of 5-10 years.
• Resist the temptation to pause SIPs due to market fluctuations; remember, volatility is only temporary.  
• Diversify across 2-3 mutual funds, not too many.
• Review once a year and change course only if there is consistent underperformance. 

Tax Implications

• Equity Funds – Gains held for over 1 year are taxed at 10% (LTCG) beyond ₹1 lakh in a year.
• Debt Funds – Taxes apply at your marginal tax rate after indexation benefits.
• An SIP in ELSS (Equity Linked Saving Scheme) offers a tax deduction of ₹1.5 lakh under Section 80C.

Conclusion

There’s no better time than now, 2025, to start investing with the plethora of digital options available that guide users step-by-step towards achieving financial freedom.