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In today’s era, everyone wants to invest to secure their future and achieve financial freedom. When it comes to investment, SIP i.e. Systematic Investment Plan in Mutual Funds is considered to be the safest, easiest and popular means.
Often people are confused that “How much should I start SIP with every month? ₹500, ₹1,000 or straight ₹5,000?” If you also have the same question in your mind, then by understanding this simple investment math and formula, you can easily decide which amount will be best for your budget and future goals.
With what amount can you start SIP?
The biggest feature of mutual fund is that it is accessible not only to a rich person but also to a common daily wage laborer or student.
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Minimum Investment: You can start your SIP with a small amount of just ₹ 500 per month in most of the good mutual funds in the country. Some select funds even allow starting with ₹100.
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Maximum Limit: There is no upper limit for investment in SIP. You can invest thousands or lakhs of rupees every month depending on your budget.
Mathematics of SIP of ₹500, ₹1,000 and ₹5,000 (for 15 years – at 12% potential return)
How the magic of compounding works when investing in the long term, you can easily understand from the figures of the SIP Calculator given below:
| Monthly SIP Amount | Total investment in 15 years | Total funds at 12% return (estimated) | Total funds at 15% return (estimated) |
| ₹500 | ₹90,000 | ₹2.52 lakh | ₹3.39 lakh |
| ₹1,000 | ₹1.80 lakh | ₹5.05 lakh | ₹6.77 lakh |
| ₹5,000 | ₹9.00 lakh | ₹25.23 lakh | ₹33.84 lakh |
Note: This calculation is an estimate based on the historical performance of the mutual fund. Actual returns may be slightly more or less due to stock market fluctuations.
Which amount will be best for you? Choose your ‘easy formula’
The amount to start with depends entirely on your current income and your future financial goals. For this you can see these 3 categories of formulas:
1. For students and beginners (formula of ₹ 500)
If you are still in college, have less pocket money or have just started an internship or a low-paying job, then a SIP of ₹500 per month is best for you.
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Benefit: This will not put any burden on your pocket and you will develop a good habit of investing regularly from an early age (Financial Discipline).
2. For middle income group and small targets (₹1,000 formula)
If you have a decent salary and are planning to buy a car, go on a vacation or build a small corpus in the next 5 to 10 years, a SIP of ₹1,000 to ₹2,000 per month is an ideal start for you.
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Advantage: You can easily save this amount from your household expenses and it turns into a big corpus in 10-15 years.
3. For big dreams and retirement planning (₹5,000 formula)
If you are an established professional, have a good regular income and your aim is to build a large retirement fund for your children’s higher education, their marriage or yourself, then you should start with a SIP of at least ₹5,000 per month or more.
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Benefit: A SIP of ₹5,000 over a long tenure of 15 to 20 years has the potential to easily make you a ‘crorepati’ with the power of compounding.
The most magical formula—’Step-Up SIP’
If you can’t start with ₹5,000 today, there’s no need to despair. The most accurate and magical investment formula is ‘Step-up SIP’.
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How does this work? Start your SIP today with just ₹ 1,000 and every year as your salary or income increases, top-up your SIP amount by 10% or 20%.
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Effect: If you increase today’s SIP of ₹ 1,000 by just 10% every year, it will eventually give you more than double the corpus as compared to a normal SIP.
Final Conclusion (Golden Rule):
The most important thing in the world of investing is not that you what a huge amount Starting from, but the most important thing is that you how soon Starting out. Rather than delay, it is better to start your financial journey today with just ₹500 and increase it with time.