Why SIPs Remain the Easiest Way to Begin Mutual Fund Investing 

For new investors, mutual funds can feel confusing. But one simple route stands out, the Systematic Investment Plan (SIP). 

SIPs let you invest a fixed amount regularly usually monthly making it ideal for salaried individuals or beginners. You don’t need to time the market or commit a large lump sum. Instead, you start small, stay consistent, and let compounding work over time. 

A SIP investment brings discipline and affordability. With just ₹100 a month, you can begin your wealth building journey without disrupting your budget. It also reduces emotional decision making during market ups and downs. 

Unlike lump sum investing, which can be riskier for first timers, SIPs spread your cost over time and ease you into the market gradually. 

Key Takeaways 

• SIP investment is ideal for beginners due to its low starting amount and automatic investing habit. 

• You don’t need to time the market rupee cost averaging handles that for you. 

• Choose your fund based on risk profile, investment horizon, and expense ratio. 

• Set up your SIP via KYC, auto debit mandate, and choose a suitable frequency. 

• Use step up SIPs to increase contributions as your income grows. 

• Avoid frequent tracking stay invested and review periodically 

SIP vs One Time Lumpsum: Quick Comparison 

• Initial Investment 

• SIP: Start with as little as ₹100 

• Lumpsum: Typically ₹5,000–₹10,000 or more 

• Market Timing 

• SIP: No need to time the market 

• Lumpsum: Market timing plays a key role 

• Risk Exposure 

• SIP: Spreads risk over time through staggered investing 

• Lumpsum: Higher risk if invested during market highs 

• Emotional Bias 

• SIP: Promotes discipline, reduces impulsive decisions 

• Lumpsum: May trigger anxiety during volatility 

• Best Suited For 

• SIP: Salaried individuals, new investors 

• Lumpsum: Investors with surplus funds or windfalls 

 While both methods have their advantages, SIP investment enables cost averaging and long term compounding making it ideal for first time investors who prefer a structured and low stress approach. 

Three Big Advantages of an SIP for First Time Investors 

1. Simplicity & Discipline 
No need to time the market. SIPs automate regular investing, helping you build a consistent saving habit. 

2. Affordability 
Begin with as little as ₹100 per month. Ideal for new investors managing other financial commitments. 

3. Power of Compounding 
Small, regular investments can grow significantly over time. A longer SIP tenure enhances wealth creation through compounding. 

How to Choose Your First Mutual Fund for SIP 

When selecting your first scheme for SIP investment, consider the following factors: 

• Risk Profile: Identify whether you are a conservative, moderate, or aggressive investor. Choose a fund that matches your ability to handle market fluctuations. 

• Investment Horizon: 

• For short term goals (up to 3 years), look at debt or liquid funds. 

• For long term goals (5 years or more), equity oriented funds generally offer better growth potential. 

• Fund Category: Beginners can consider large cap funds or aggressive hybrid funds. These categories offer a balance of stability and return potential. 

• Expense Ratio: Check the ongoing charges for managing the fund. Lower expense ratios help retain more of your returns over time.   

• Exit Load: Understand any penalties for early withdrawal. Some funds charge an exit load if redeemed within a certain time frame. 

Setting Up the Mandate: KYC, Auto Debit & Frequency 

To start your SIP investment, follow these basic steps: 

1. Complete KYC (Know Your Customer) 
   Submit your PAN, address proof, and photograph. This can be done online (e KYC) or offline. 

2. Set Up Auto Debit 
   Use an e mandate or standing instruction to ensure the SIP amount is automatically debited from your bank account on the chosen date. 

3. Select Investment Frequency 
   Most investors opt for monthly SIPs, but weekly or quarterly frequencies are also available based on your preference and cash flow. 

Monitoring Your SIP Without Micromanaging 

Once your SIP investment is active, avoid checking it too frequently. Instead, follow a structured review approach: 

• Review Quarterly or Semi Annually 
  Evaluate fund performance against its benchmark and peer funds. Check for consistency and alignment with your goals. 

• Track Goal Progress 
  Use SIP calculators to monitor if you’re on course to meet your financial targets. 

• Use Step Up SIP if Needed 
  As your income increases, consider raising your SIP amount to keep pace with inflation and changing goals. 

• Stay Invested During Volatility 
  Avoid reacting to short term market fluctuations. Long term investing through SIPs helps average costs and build wealth steadily. 

Conclusion: 

For first time investors, SIPs offer an easy, low commitment entry into the world of mutual fund. With affordability, automation, and long term compounding on your side, you don’t need to worry about timing the market or making large initial investments. Just start small, stay consistent, and review your goals periodically. SIPs build not just wealth, but good financial discipline over time. 

FAQs 

Q1. Can I start a SIP with ₹100 per month 
Yes, many mutual funds allow SIP investments starting from as low as ₹100, making it accessible for all investors. 

Q2. Is SIP better than lump sum for first time investors 
Generally yes. SIPs spread your investments over time, reducing risk and emotional stress, unlike lump sum which requires timing the market. 

Q3. Do I need to complete KYC before starting a SIP 
Yes. KYC is mandatory. It can be completed online (e KYC) or offline using your PAN and address proof. 

Q4. How often should I review my SIP 
Ideally, review your SIPs every 6 months or quarterly to track fund performance and goal alignment. 

Q5. What is a step up SIP 
A step up SIP lets you automatically increase your monthly SIP contribution at regular intervals helping grow your wealth faster as your income rises.