How should you plan your SIP Mutual Fund Investment?

SIP (Systematic Investment Funds) have emerged as the most favoured mode for investing in mutual funds. It is not very easy to choose a systematic investment plan and then make investments periodically. The best thing about SIP investments is that you would get better returns even when the market is low or down. SIPs will protect your investments during the time of potential market crashes.

The most common questions which come to people’s minds before investing in SIP is that which is the best time to invest, how much amount to invest and also when to exit SIP. Here are some of the factors that you should keep in mind before planning your SIP mutual fund investment.

What are your goals for investing?

Every investment which is made in the market is goal-oriented. First and foremost, you have to be very clear about your financial goals. You should ask yourself the following questions before investing:

  1. What is the reason for my investment?
  2. How much risk can I afford to take?
  3. How long will be the term of investment?

You can classify your goals and investments to be short-term and long-term. You should choose a goal that suits you and then invest accordingly.

Returns of the funds

This is an important parameter which would affect your decision of choosing a fund. Before choosing a fund, you should compare it on the basis of its performance in the past. The best way of choosing a fund is to select a fund which has not only performed well in the markets during a bull run, but it has also handled the losses very effectively. This will give you a rough idea, but it is not necessary that the fund will again repeat history. By analyzing the fund, you would get the idea of whether you should invest in it or not.

Know the size of the fund

The fund manager will invest in different sectors from the pool of money that has been invested by investors. This will state the total Assets under Management (AUM) size of the fund. You should invest in a scheme which has a high base of AUM. It is advised by the experts to invest in a SIP which has a total AUM of at least Rs. 700 crores.

Let’s understand the compounding benefits of SIP

What is the history of the fund?

This is a very important aspect to understand before investing in a SIP. There are various funds available in the market and the biggest confusion for the people is with regards to the fund they should invest. The answer to this question is very simple. You should always look for a fund which possesses a strong background and history. The funds which have been in the market for more than five years are considered to be the best to invest in. You should always look whether your SIP and your financial goals are linked or not. You can even choose the option of Step-Up SIPs that will allow you to increase the SIP amounts periodically.

Opt for Step Up SIPs

If you invest 6500 per month over the period of 30 years and expect at least a 12% return, then your corpus will grow to Rs. 2.29 crores

With Step Up SIP, you can increase the SIP amount by 10%. As a result, the corpus will grow to Rs. 5.74 crores! This is approximately double with what you would have if you have done plain SIP

What should be the duration of investing?

It is an important factor to keep in mind before investing in SIP because a lot would depend on it. The duration of SIP is considered to be an important point of view on the basis of returns, risk, and taxes. You should keep a reference of at least five years and see how it has performed in the market. Here are the best tips for your SIP investment.


Like any decision you take in life, you need to thoroughly research before starting a SIP. The duration, amount and the type of SIP will depend upon a lot of factors including your age, financial goals and responsibilities, income, ability to take risks etc. Knowing about these factors can help you become significantly rich if you give the markets, a realistic timeframe. The history, size, and returns are the factors which you should keenly study before investing in a SIP.

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