Typically, the required minimum amount to invest in SIPs is ₹500. However, many AMCs are now offering SIPs starting at ₹100. An SIP is a great investment option for retail investors. It allows you to contribute towards wealth creation, while inculcating financial discipline. 


Different funds can have different minimum SIP amounts and the ultimate decision comes down to your long-term financial goals.

Mutual Fund Investing: Deciding Your Strategy

Mutual fund investments are no longer viewed as instruments demanding large amounts of cash deposits. Depending on your affordability and goals, you can set aside as little as ₹100 to start investing. 

 

The two methods of investing in mutual funds are classified as follows:

  1. SIPs: An SIP is a systematic way of investing monthly amounts in the mutual fund of your choice. Micro-SIP schemes aimed to capture the rural market offer monthly SIPs starting at ₹100. Here, you make consistent contributions based on the agreed upon frequency, until you wish to stop.

  2. Lump sum: This is suitable for investors having large amounts of capital at their disposal. While the minimum lump sum amount in mutual funds is ₹100, there are no upper limits on how much you can invest. Offering scope for high returns, this is accompanied by the risk of the capital deteriorating due to sudden market fluctuations.

How Does an SIP Work?

Once you activate an SIP, a set amount gets automatically deducted from your account. You need not time the market for your investment, every time. 

 

You are allotted more units during a bearish market with SIPs. On the other hand, a bullish market means lesser unit allocation. Hence, the unit cost or NAV is likely different for every instalment. Mostly, SIPs are set up to invest monthly, but you can also choose to invest: 

  • Daily

  • Quarterly

  • bi-annually

  • Annually

 

You can track your mutual funds online, increase or decrease the SIP amount, pause or even stop your SIP investment.

Benefits of Investing in SIPs

There are many benefits of investing in mutual funds via SIPs. Here are two key features of SIP investments:

Rupee Cost Averaging

SIPs help you buy more equity fund units when the stock markets are plummeting and fewer units when it is soaring. This averages out the purchase price of equity fund units over time. This is called rupee cost averaging and it reduces the impact of market volatility. This substantially reduces the cost of investing via SIPs.

Compounding

Compounding plays a huge role in magnifying your SIP returns. It can be considered as a return on your returns. This happens due to the reinvestment of returns in your portfolio. To benefit from the power of compounding in the long run, start investing as early as possible.

Factors to Consider Before Choosing an SIP

Here are two key factors to consider before activating your SIP investment:

  • Investment Goals: Consider your long-term goals before investing. If your goal is to build a significant corpus in 5 years, a ₹100 minimum investment in a debt fund is not ideal. Hence, carefully consider your goals to make sure your investment aligns with them.

  • Risk Appetite: Equity funds are suitable for investors with a higher risk appetite. However, remember that there is no guarantee of returns and invest only as much as you can afford to lose.

Who Should Consider SIPs?

SIP investments are a great way to build good financial habits. It is suitable for first-time investors who are new to the mutual fund market. Young, salaried individuals can benefit by directing a portion of their salary towards regular SIPs. 

 

With the effect of compounding, this can grow to be a large corpus over time. It also helps to instil financial discipline and plan for financial freedom.

 

In conclusion, make sure you choose an SIP which can meet your investment goals over time. Beginners can start with small amounts and increase this over time, according to their income levels and risk profile. 


You can find various SIP options on Bajaj Markets. Here you can compare costs, past performance between different funds. You can also use the SIP calculator to determine your monthly contribution required to meet your goals.

FAQs

Is it possible to invest through daily SIP payments?

Yes, there are many funds which allow daily SIP investments. For example, HDFC offers a Daily MF SIP.

What is the daily SIP minimum amount?

This differs from fund to fund, with fund houses offering daily SIPs between ₹100 and ₹300. However, the demand for lower SIP investments may lead this to drop further in the future.

Is investing via lump sum better than SIPs?

Lump sum investment requires you to time the market well in order to make maximum returns. So, it is a better choice for seasoned investors. However, SIPs can be better over the long term simply because of rupee cost averaging.

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