How To Invest In SIP For Beginners: An Exclusive Guide 2025

Table of Contents

Introduction

Are you looking to build wealth without constantly tracking the stock market? If so, investing in Systematic Investment Plans (SIPs) could be your smartest move!

I remember when I first started my SIP journey—I was overwhelmed with choices, risks, and financial jargon. However, investing became effortless and rewarding once I understood how SIPs work.

Did you know that long-term SIP investments in India have historically given average returns of 12-15%? Thanks to the power of compounding and rupee cost averaging, SIPs help you grow wealth in a disciplined manner.

Whether you are a young professional, a salaried employee, or a business owner, this guide will explore everything you need to know about how to start investing in SIPs in 2025.

So let’s start with Us!

What is a Systematic Investment Plan (SIP)?

SIP is a method of investing in mutual funds, where you invest a fixed amount at regular intervals (monthly, quarterly, or yearly). Instead of investing a lump sum, SIP allows you to build wealth gradually while reducing market risks.

Key Features of SIP:

Automated investments – Deducted directly from your bank account
Small investment amounts – Start with as little as ₹500 per month
Compounding benefits – Earn returns on both your principal and accumulated interest
Market volatility protection – Rupee cost averaging helps minimize risks

SIP is perfect for beginners as it removes the need to time the market and encourages long-term wealth creation.

Benefits of Investing in SIPs in 2025

1. Power of Compounding

Star investing in SIP as early as possible to get better ROI. Even a small SIP of ₹5,000 per month for 20 years can grow to over ₹50 lakhs with an average return of 12%.

2. Rupee Cost Averaging

Since you invest a fixed amount regularly, you buy more mutual fund units when the market is down and fewer when it’s high. This reduces the overall cost of investment and boosts returns.

3. Disciplined Investment Approach

SIP ensures consistent investments, making financial planning easier. It eliminates the fear of market fluctuations and impulsive investment decisions.

4. Flexibility & Affordability

You can start with ₹500 per month and increase your SIP amount as your income grows. SIPs are customizable, allowing you to pause, increase, or decrease investments anytime.

SIPs offer flexibility, allowing investments to start with as little as ₹500 per month35. Investors can opt for weekly, monthly, or quarterly SIPs.

How SIP [Systamatic Investment Plan] Works

infographic-image-how-sip-works — **How Systematic Investment Plan Works**

When you invest in SIP, a fixed amount is debited from your bank account and invested in a mutual fund scheme of your choice.

The mutual fund units are allotted based on the current Net Asset Value (NAV). Over time, as the market fluctuates, you purchase units at different NAVs, which averages out the cost of your investments.

How to Choose the Right SIP for Beginners

1. Types of Mutual Funds for SIP

Equity Mutual Funds – Best for long-term growth
Debt Mutual Funds – Low-risk, suitable for short-term goals
Hybrid Mutual Funds – Balanced mix of equity and debt

2. Assessing Risk vs. Return

Check the historical performance, volatility, and risk profile before investing. Higher risk means higher potential returns, but beginners should start with a balanced approach.

3. Expense Ratios & Fund Ratings

Funds with lower expense ratios and high ratings from CRISIL & Morningstar tend to perform better in the long run.

How to Invest in SIP for Beginners in 2025

Step-by-Step Guide to Investing in SIP in 2025

Step 1: Set Financial Goals

Define your investment purpose: Is it for wealth creation, buying a house, or retirement planning? Your goal will determine the type of mutual fund you choose.

Before starting a SIP, it is crucial to define your financial goals. Whether it’s saving for retirement, a child’s education, or buying a home, clear goals will help in selecting the right mutual fund scheme.

Step 2: Select a Mutual Fund

Compare different funds based on past performance, risk, and investment objectives. Platforms like Groww, Zerodha Coin, or Kuvera can help you research funds.

Research and compare different mutual funds based on their performance, fund manager’s experience, expense ratio, and investment strategy.

Use tools like mutual fund rating agencies and online comparison platforms to make an informed decision.

Step 3: Choose Investment Amount & Risk

Decide how much you can invest each month. A good rule of thumb is to allocate at least 20% of your salary to investments.

Review the historical performance of the mutual fund to gauge its consistency and reliability. Look for funds that have performed well across different market cycles and have a stable track record.

Understanding your risk tolerance is essential in choosing the right SIP. Higher risk tolerance may lead to investing in equity funds, while lower risk tolerance might favor debt or balanced funds.

Step 4: Complete the KYC Process

To invest in SIPs, you need to complete KYC (Know Your Customer) verification. This can be done online using Aadhaar-based eKYC.

KYC (Know Your Customer) Process: Complete the KYC process, which involves submitting identity and address proofs. This is mandatory for investing in mutual funds in India.

Gather necessary documents such as PAN card, Aadhaar card, bank account details, and a canceled cheque. These are required for completing the KYC and setting up the SIP.

Step 5: Start Your SIP Investment

Choose a reliable broker or online platform to invest in SIP. Consider factors like ease of use, customer service, transaction fees, and additional features offered by the platform.

Use platforms like ETMoney, Paytm Money, or mutual fund company websites to initiate your SIP. Set up an auto-debit mandate to automate investments.

Step 6: Monitor & Review Your SIP Portfolio

Track fund performance every 6-12 months and rebalance your portfolio if needed.

Most platforms offer the convenience of setting up SIP online. Fill out the required forms, select the mutual fund scheme, decide the SIP amount and frequency, and set up the auto-debit mandate from your bank account.

If you a are beginner, the Above points are the complete & detailed process you can follow to invest in SIP [Systamatic Investment plan].

Types of SIP [Systamatic Investment Plan]

SIPs are like a friendly guide, helping you invest small amounts regularly without the stress of market timing. Each type of SIP is designed to suit different needs and goals, making investing even more flexible and fun.

Let’s explore the different types of SIPs and how you can invest as a beginner & find out which one might be your perfect match.

Flexible SIP

This systematic investment plan all investors to change their SIP amount at any point in time, If an investor has surplus money, they can increase the SIP amount, and if they are facing financial constraints, they can decrease it.

Top-up SIP

Top-up SIP enables investors to increase their SIP amount at regular intervals. This helps in aligning the investment with rising income levels and achieving financial goals faster.

Perpetual SIP

This Systematic investment plan refers to the continued investment for an indefinite period until the investor wants to stop it. This is suitable for long-term financial goals like retirement planning.

Trigger SIP

Trigger systematic investment plans are those investments where investors are triggered based on the market situation or their financial goals. For example, an investor can set a trigger to invest more when the market dips by a certain percentage.

Best Investment Platforms for SIP in India

If you are planning to start investing in SIPs, choosing the right investment platform is crucial. Here are some of the best SIP investment platforms in India for 2025:

1. Groww

Zero commission and easy-to-use interface
Provides a variety of mutual funds with performance analysis
Offers direct mutual fund investments with no hidden charges

2. Zerodha Coin

Backed by India’s leading stockbroker, Zerodha
Allows investment in direct mutual funds without commissions
Seamless integration with Zerodha’s trading account

3. ETMoney

AI-powered recommendations based on risk profile
Features tax-saving options and goal-based investing
Provides SIP tracking and automated investing

4. Paytm Money

Low-cost investment platform with a smooth interface
Offers a wide range of direct mutual funds
Provides insights and SIP calculators for investment planning

5. Kuvera

Free direct mutual fund investments
Offers robo-advisory services for personalized recommendations
User-friendly dashboard for tracking portfolio performance

Best SIPs to Invest in the Market 2025

Starting a Systematic Investment Plan (SIP) is a great way for beginners to enter the world of mutual funds and start building wealth over time.

Here are some of the best SIPs for beginners:

Axis Bluechip Fund

Category: Large Cap Fund
Why: Focuses on blue-chip companies with a strong track record, which tends to be less volatile.
Returns: Historically stable and decent returns.

Mirae Asset Large Cap Fund

Category: Large Cap Fund
Why: Consistent performer with a diversified portfolio in large-cap stocks.
Returns: Good long-term performance.

SBI Small Cap Fund

Category: Small Cap Fund
Why: Ideal for those with a higher risk appetite looking for higher returns.
Returns: Higher potential for returns, but comes with higher risk.

ICICI Prudential Bluechip Fund

Category: Large Cap Fund
Why: Invests in established large-cap companies, offering growth with relatively lower risk.
Returns: Consistent long-term performance.

HDFC Mid-Cap Opportunities Fund

Category: Mid Cap Fund
Why: Focuses on mid-sized companies with growth potential.
Returns: Balanced risk and return profile.

Kotak Standard Multicap Fund

Category: Multi-Cap Fund
Why: Diversified across large, mid, and small-cap stocks, offering a balanced approach.
Returns: Good long-term performance.

DSP Equity Opportunities Fund

Category: Multi-Cap Fund
Why: Invests in a mix of large and mid-cap stocks, providing stability and growth potential.
Returns: Stable performance with moderate risk.

L&T Emerging Businesses Fund

Category: Small Cap Fund
Why: High growth potential, they focus on small-cap companies.
Returns: High potential returns with higher risk.

Before investing in SIP, it’s also recommended to consult with a financial advisor to tailor your investments to your specific financial goals and risk profile.

Best Platforms to Invest in SIP for Beginners

Mutual Fund Companies’ Websites: Most mutual fund companies offer the option to invest directly through their websites. This can be cost-effective since there are no extra fees.
Banks: Many banks offer SIP options through their investment services. You can easily set up a SIP through your bank’s online portal or by visiting a branch.

Investment Apps

Groww: A user-friendly app that makes it easy to start and manage SIPs.
Zerodha Coin: Known for its low fees, this app offers direct mutual fund investments.
Paytm Money: Offers a seamless and straightforward way to start SIPs.
ET Money: This app provides smart investment options and tools to manage your SIPs.

Robo-Advisors

Upstox: Offers personalized investment advice and easy SIP setup.
Scripbox: Helps you choose the best funds for your SIPs based on your goals.

Brokerage Firms

HDFC Securities: Offers a wide range of mutual fund options for SIPs.
ICICI Direct: Known for its comprehensive investment services, including SIPs.
Kotak Securities: Provides various SIP options and investment advice.

Online Marketplaces

Kuvera: A no-commission platform that offers direct mutual fund investments.
FundsIndia: Offers a variety of funds and an easy setup for SIPs.

Government Platforms

CAMS (Computer Age Management Services): A mutual fund transfer agency that offers SIP investments through its MyCAMS app.
KFintech: Another platform providing SIP options through its KFinKart app.

If you are a beginner, these platforms make it easy and convenient to start and manage your SIPs, helping you grow your investments over time.

Global Platforms to Invest in SIPs

Vanguard: Known for its low-cost mutual funds and ETFs, Vanguard offers automated investment plans that function similarly to SIPs.
Fidelity: Fidelity provides a wide range of mutual funds and ETFs and allows for automatic investments, making it easy to set up a systematic investment plan.

Charles Schwab: This platform offers a variety of mutual funds and ETFs and supports regular, automated investments.
E*TRADE: E*TRADE offers numerous investment options and allows for automatic investing, making it suitable for setting up SIPs.

Interactive Brokers: A global brokerage firm that offers a variety of investment options, including mutual funds and ETFs, with automated investment features.
Betterment: A robo-advisor that creates automated, personalized investment plans based on your goals and risk tolerance.

Merrill Edge: Offers automated investment options through its Guided Investing service, which can be set up similarly to SIPs.
Robinhood: Known for commission-free trading, Robinhood also offers automated investing features that can be used to set up regular investments.

Acorns: This app automatically invests your spare change and allows for regular contributions, making it easy to set up a systematic investment plan.
Stash: A user-friendly app that offers automated investing and educational tools, making it easy to start and manage SIPs.

types-of-bonds-in-india — **Image credit: Pixabay.com**

How to Manage Your SIP

Monitoring SIP Performance
Regularly review the performance of your SIP to ensure it aligns with your financial goals. Use tools and apps that provide updates and analysis of your investment portfolio.

Adjusting SIP Amount
Based on your financial situation and market conditions, adjust your SIP amount. Increasing the SIP amount can help in achieving goals faster while decreasing it can provide relief during financial constraints.

Handling Market Volatility
Market volatility is inevitable, but it should not deter you from continuing your SIP. Remember, SIPs are designed to benefit from market fluctuations through rupee cost averaging.

Rebalancing Your Portfolio
Periodically review and rebalance your investment portfolio to ensure it remains aligned with your risk tolerance and financial goals. This may involve shifting investments between different asset classes or funds.

Tax Implications of SIP

Tax Benefits of SIP

Investing in SIPs, particularly in Equity Linked Savings Schemes (ELSS), can provide tax benefits under Section 80C of the Income Tax Act. This can reduce your taxable income by up to ₹1.5 lakh per year.

Taxation on SIP Returns

The returns from SIPs are subject to capital gains tax. Short-term capital gains (STCG) from equity funds are taxed at 15%, while long-term capital gains (LTCG) over ₹1 lakh are taxed at 10% without indexation benefits. Debt fund returns are taxed differently based on the holding period.

Tax-saving SIP Options

ELSS funds are popular SIP options for tax-saving purposes. They have a lock-in period of three years and provide the dual benefit of tax savings and the potential for higher returns.

Mistakes to Avoid as a Beginner in SIP Investment

Ignoring Financial Goals
Investing in SIP without clear financial goals can lead to suboptimal investment choices. Define your goals to select the right funds and investment strategy.

Not Reviewing SIP Performance
Failing to monitor your SIP’s performance can result in missed opportunities for better returns. Regularly review and compare your SIP against benchmarks and peers.

Withdrawing SIPs Prematurely
Prematurely withdrawing SIPs can disrupt your financial plans and incur exit loads or tax implications. Stick to your investment horizon to maximize returns.

Investing in the Wrong Mutual Funds.

Choosing the wrong mutual funds can lead to poor returns and increased risk. Research thoroughly and consider factors like fund performance, expense ratio, and investment strategy before investing.

SIP vs Other Investment Options

SIP vs Fixed Deposits
SIPs offer the potential for higher returns compared to fixed deposits, which provide fixed and lower interest rates. However, FDs are considered safer due to guaranteed returns.

SIP vs Stocks
Investing in SIPs provides diversification and professional management, reducing individual stock risks. Direct stock investments can be more volatile and require more expertise.

SIP vs Recurring Deposits
SIPs have the potential for higher returns compared to recurring deposits, which offer fixed returns. However, RDs are safer with guaranteed interest rates.

SIP vs Real Estate
SIPs offer liquidity and ease of investment compared to real estate, which requires significant capital and has higher transaction costs. Real estate investments give you the best returns but they also require more risk & offline management.

My Recommended Top 5 SIPs to Invest in 2025

1. Mirae Asset Large Cap Fund

Category: Large Cap Fund
Returns: 15-18% annualized returns over the last 5 years
Why Invest? Strong track record and consistent performance in large-cap companies

2. SBI Small Cap Fund

Category: Small Cap Fund
Returns: 18-22% annualized returns
Why Invest? Best suited for aggressive investors looking for long-term high-growth

3. Axis Bluechip Fund

Category: Large Cap Fund
Returns: 14-16% annualized returns
Why Invest? Stability, blue-chip investments, and strong management

4. HDFC Hybrid Equity Fund

Category: Hybrid Fund (Equity + Debt)
Returns: 12-14% annualized returns
Why Invest? Balanced fund that reduces risk while offering decent returns

5. Parag Parikh Flexi Cap Fund

Category: Flexi Cap Fund
Returns: 15-18% annualized returns
Why Invest? Diversified across domestic and international stocks, reducing risk

Note: Always consult a financial advisor before investing.

Expert Insights for Beginner Investors in SIP

Start early and invest consistently.
Diversify your investments across different mutual funds.

Avoid emotional decisions based on market fluctuations.
Set your clear financial goals.

Understand your risk tolerance.
Choose the right mutual funds based on research.
Monitor and adjust your investments periodically.

FAQs About Investing in SIP

Is SIP tax-free?

No, SIP investments are not tax-free. Gains from SIPs are subject to capital gains tax based on the holding period. Short-term gains are taxed higher than long-term gains. Equity funds held for over a year qualify for lower long-term capital gains tax.

Is there any risk in SIP?

Yes, SIPs carry market risks, and investment values can fluctuate. However, regular investments through SIPs help manage risk by averaging out costs over time, making them generally safer than lump-sum investments.

How to choose a SIP plan?

Choose a SIP plan by assessing your financial goals, risk tolerance, and investment horizon. Research funds based on past performance, expense ratio, and fund manager reputation. Diversify investments across different fund categories for balanced risk and return.

Which is better, LIC or SIP?

LIC policies provide insurance and savings with guaranteed returns, while SIPs focus on wealth creation with higher, market-linked returns. For investment growth, SIPs are generally better, and for insurance, an LIC is suitable.

How to invest in SIP online?

Choose a mutual fund platform, create an account, and complete KYC. Select a mutual fund, enter the amount and frequency of investment, and link your bank account for auto-debit. Review and confirm your details to start your SIP.

What happens after SIP maturity?

After SIP maturity, you can withdraw your funds, stay invested, or switch to another mutual fund scheme. Evaluate your financial goals and market conditions to decide the best course of action for your matured SIP.

Which SIP plan is best for beginners?

Large-cap funds like Axis Bluechip Fund or Mirae Asset Large Cap Fund are ideal for beginners due to their stability and lower risk. These funds invest in well-established companies, providing consistent returns and less volatility.

Final Conclusion

In Conclusion, Investing in SIPs is a disciplined and effective way to build wealth over time. Understanding the basics, types, and benefits of SIPs, along with careful planning and regular monitoring, can help in achieving your financial goals.

I started my SIP journey with just ₹1,000 per month, and today, I see the magic of compounding working in my favor.

The key is to start early, stay consistent, and track your investments periodically. Whether you want to build a retirement corpus, fund your child’s education, or achieve financial independence, SIPs can help you reach your goals without stress.

I hope you like this article about “How to invest in SIP for beginners” If you have any thoughts or suggestions, please write to us in the comment section below.

So, what’s stopping you? Take your first step today and start your SIP investment journey in 2025! 🚀

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Author

Aashish

I am a commerce graduate with a passion for blogging. I share tips and insights on blogging, SEO, digital marketing, and ways to make money online through various channels. Additionally, I offer content writing, SEO services, and blogging mentorship.
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