Financial Tips • Beginner

Mutual Funds SIP for Beginners: How to Start SIPs with ₹100

By MoneyFinTips Editorial · · Reading time: ~7 minutes

If you’re new to investing, mutual funds + SIPs are one of the simplest and safest ways to begin. This guide on SIP for beginners walks you through what mutual funds are, how SIPs work, a real SIP example starting at ₹100/month, how to pick funds, and the exact checklist to start today.

What are mutual funds? (Short & clear)

A mutual fund pools money from many investors and invests the pooled money in a diversified portfolio of stocks, bonds, or other assets. They’re particularly useful for mutual funds beginners, since professionals manage them while you simply contribute regularly.

What is a SIP (Systematic Investment Plan)?

A SIP is a way to invest a fixed amount regularly (e.g., monthly) into a mutual fund. SIPs are ideal for beginners because they are automated, disciplined, and affordable.
SIPs remove the stress of timing the market. Start small — even ₹100/month is meaningful over time. For SIP for beginners, the beauty lies in simplicity: set, forget, and let compounding do the heavy lifting.

How to start a SIP (7-step checklist)

  1. Complete KYC: Mandatory in India, can be done online via KYC service providers or through fund houses / broker apps.
  2. Choose the right platform: Use a reliable AMC (fund house site), regulated broker, or trusted app with low fees.

    Open Zerodha Account Open Groww Account

  3. Decide your goal & horizon: Saving for 3 years, 10 years, or retirement? This affects your fund type and risk tolerance.
  4. Pick a fund category: For mutual funds beginners, index funds or large-cap equity funds are excellent choices.
  5. Check the basics: Expense ratio, AUM, fund performance vs benchmark, and fund manager tenure.
  6. Start SIP investment: Set SIP amount (₹100 in our example), frequency (monthly), and start date; enable auto-debit (NACH/mandate).
  7. Review annually: Compare performance vs benchmark once a year and rebalance if needed.

SIP example: What ₹100 per month can grow into

Assumption: monthly SIP at the end of each month; expected annual return = 12% (illustration only).

Formula for SIP future value: FV = P × [ ( (1 + r/12)^(12×years) − 1 ) / (r/12) ] Where:
  • P = monthly SIP amount = ₹100
  • r = annual return (decimal) = 0.12
  • years = 10
Plugging values in gives a future value ≈ ₹1,15,019 after 10 years. (Calculation: ₹100 × [ (1+0.12/12)^(120) − 1 ] ÷ (0.12/12) ≈ ₹115,019) Takeaway: ₹100/month looks small now, but compounding grows it. If you gradually start SIP investment with higher amounts, the long-term effect magnifies.

How to choose beginner-friendly funds (Easy checklist)

  • Start with index funds or low-cost large-cap funds — lower costs and predictable market returns.
  • Expense ratio: Lower is better — a small difference compounds over years.
  • AUM: Assets under management show size; too small might be risky, too large can be difficult to outperform.
  • Performance vs benchmark (5-year): Check consistent outperformance against the fund’s benchmark, not just 1-year returns.
  • Fund manager & house reputation: Longer manager tenure and stable team is a plus.
  • Exit load & taxation: Know minimum holding period and tax consequences for equity (short-term vs long-term capital gains).

This section doubles as a SIP guide India because it captures what most Indian beginners need before taking their first step.

Common mistakes beginners make (how to avoid them)

  • Chasing 1-year returns: Avoid picking funds solely for recent high returns.
  • Switching too often: Frequent changes reduce compounding and may create tax events.
  • Ignoring cost: High expense ratios and transaction costs destroy returns.
  • Not automating: Manual investing misses discipline — use auto-debit/NACH.
  • Not having an emergency fund: Always keep 3–6 months of expenses in liquid assets before equity exposure.

For beginner finance tips, the mantra is: keep it simple, automate, and stay consistent.

Quick resources & downloads

SIP Starter Checklist (Free)

Complete KYC, choose platform, and start SIP.

Start with Zerodha Open Groww Account

These resources are tailored as beginner finance tips, so you never get stuck in analysis paralysis.

Conclusion — small steps matter

For most people starting out, a SIP in a simple, low-cost mutual fund is the best doorway into wealth creation. Begin with a comfortable amount — ₹100 works — automate it, keep an emergency fund, and review yearly.

This is the essence of SIP for beginners: simple, disciplined, and scalable. Over time, consistency transforms small contributions into meaningful wealth. And with steady learning plus beginner finance tips, your journey stays safe and effective.

Frequently asked questions

Is ₹100 enough to start a SIP?

Yes — ₹100/month is a good starting point. The goal is discipline and habit; you can increase the amount gradually.

Should I choose an index fund or an actively managed fund?

For beginners, index funds are recommended due to low cost and diversification. Active funds may aim to outperform but have higher fees and risk.

What if I need the money earlier than planned?

If you need money earlier, consider keeping short-term savings in liquid debt funds or bank instruments. Equity funds are better for medium-to-long-term goals.

MFT
MoneyFinTips Editorial
Beginner-focused finance guides. Educational content — not financial advice. Consult a certified financial advisor for personalised advice.
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