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What is the appropriate time to invest in SIP and how to start SIP investment?

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As a poet once wrote: "Little drops of water, little grains of sand, make the mighty ocean and the beauteous land."
Systematic Investment Plans (SIPs) are those little drops of investments that can help create wealth for an investor. Over the past decade, SIPs have gained immense popularity among investors. Such has been the impact of SIPs that, these days, even seasoned investors favour breaking up their big financial dreams into smaller and more achievable goals.

In this article, we will understand the concept of SIPs, when should you start an SIP, and how to start SIP investment.

What is an SIP?

A Systematic Investment Plan or SIP is an investment option that allows investors to invest small amounts in a mutual fund scheme periodically. It is as simple as regular saving schemes, such as a recurring deposit. For example, an investor can invest a fixed amount as low as Rs.1000 in a mutual fund scheme at regular intervals – monthly or quarterly. Thus, SIPs free investors from having to commit a large lumpsum amount in one go. Moreover, SIPs also inculcate a sense of financial discipline in the long run. The best part is that investors have the liberty to redeem the investment at any time if there is no lock-in period.

Is there a right time to invest in mutual funds?

Though there are many claims about the best time to invest in mutual funds, genuinely, there is no specific 'best time'. You can invest in mutual funds any time you are ready. While the ups and downs of the market can lead to potential losses in the short term, the market may normalise in the longer duration. Thus, it is more important for the investors to stay invested for a longer duration than timing the market. This can help them make the most of their investment in mutual funds. Moreover, the earlier you start, the better growth opportunity you could see, as this allows the power of compounding ample time to make your money grow.

How to invest in SIP?

Now that you have made up your mind to go for a SIP, here are a few simple steps to invest in it:

Set up an investment goal: Investment goals assign a purpose to the money you want to invest. With a set goal, you are likelier to stick with your performing investment for a longer time rather than focusing on gains or losses. So, figure out why you want to invest in something and honour your risk appetite. You can also seek to invest in SIP with the help of a distributor or by visiting the fund house’s website.

Choose the right mutual fund scheme: Once your goal is clear, research and scrutinise the various mutual fund schemes that align well with your investment objective. You can also seek the advice of a distributor to zero in on the right mutual fund scheme.

KYC: As per the guidelines of the Securities and Exchange Board of India (SEBI), KYC verification is mandatory for all kinds of mutual fund investments. The process is quite simple and doesn’t take much time.

Fill out the application form: The application form to start a SIP requires certain details like personal data, bank information, investment amount, period etc. It is up to the investor to either fill out an online form or an offline form. Once the details in the form are filled in, the application is further processed.

Set up the SIP: An investor can set up the SIP through net banking or via standing instruction to the bank. Here, you must choose the SIP amount, monthly or quarterly debit date, post-dated cheques or auto-debits, SIP duration, etc. Also, make sure that you have sufficient funds available in the bank account on the due date.

SIPs are considered a convenient and disciplined approach to investing. They uphold the investment goals and ensure steady, long-term growth. A fixed amount is deducted from your bank periodically and is directed to the mutual fund you choose to invest in. Ideally, there is no specific time to invest in SIPs, but it is recommended to start an SIP early for a longer duration to avail yourself the opportunity of long-term growth. To invest in an SIP, you first need to first figure out an investment goal and then select the right mutual fund scheme. The process to set up an SIP is quite simple – either you can seek the help of a distributor or fill out the online SIP investment application form, select the SIP amount, debit date, or auto-debits, SIP duration etc., do the KYC and monitor the investment on a regular basis.


Are SIPs good for beginners?

Yes, SIPs can be a good investment option for new investors as it allows them to invest small amounts of money regularly over time. This can help them build a diversified portfolio and reduce the impact of market volatility. It's important to choose an SIP that suits your investment goals, risk tolerance, and time horizon. You must also consult with a financial advisor before investing.

Can I change the investment amount or frequency of my SIP?

Yes, most mutual fund schemes offer the flexibility to increase or decrease the investment amount, as well as change the frequency of investment. It's important to note that most mutual funds may have a minimum investment amount for SIPs.

When is the best time to invest in SIP?

While there is no defined ‘best time’ to invest in SIP, you must try to start SIP investments as early as possible. When investing in SIP, ensure that you are comfortable with the investment amount and frequency. Trying to time the market is not recommended, as it can be difficult to predict market movements. SIP is a long-term investment strategy, so it's important to invest regularly and stay invested for a longer period to benefit from compounding returns over long term.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.