Systematic Investment Plans (SIPs) are one of the easiest and most disciplined ways to start investing in mutual funds. Even with a small amount like ₹500 per month, long-term wealth creation is possible through consistency and compounding.
This guide explains how to start a SIP in mutual funds in six easy steps, making it suitable for first-time investors.
A SIP allows a fixed amount to be invested regularly, monthly, quarterly, or weekly, into a mutual fund scheme. Investments are made automatically, helping reduce the impact of market volatility through rupee cost averaging.
SIPs are ideal for beginners due to their simplicity and affordability.
KYC (Know Your Customer) is mandatory before investing in mutual funds in India. The process usually requires:
PAN card
Aadhaar or address proof
Bank account details
KYC can be completed online through AMC websites, registrar platforms, or investment apps.
Before starting a SIP, the mutual fund category should be selected based on risk tolerance and investment goals:
Equity funds: Higher risk, higher long-term return potential
Debt funds: Lower risk, stable returns
Hybrid funds: Balanced mix of equity and debt
For small SIP amounts like ₹500, beginners often start with diversified equity or hybrid funds.
Most mutual funds allow SIPs starting from ₹500 per month. A convenient debit date should be chosen based on income cycles to ensure sufficient bank balance.
Consistency is more important than the amount invested.
The SIP requires bank account linking and mandate registration for automatic monthly deductions. Once the mandate is approved, the investment amount is debited automatically on the selected date.
This removes the need for manual investing every month.
While SIPs encourage long-term investing, periodic reviews are important. Performance, goal alignment, and risk levels should be checked annually.
Increasing the SIP amount gradually over time can significantly boost long-term returns.
Stopping SIPs during market downturns
Frequently switching funds
Ignoring expense ratios
Expecting short-term gains
Patience and discipline are key to SIP success.
Starting a SIP with just ₹500 per month lowers the entry barrier to investing and builds strong financial habits. Over time, small investments can grow into meaningful wealth through the power of compounding.
The best time to start a SIP is early—and staying consistent makes all the difference.