If you want to start investing in mutual funds through an SIP, then you might be wondering how to choose the best SIP plan. A Systematic Investment Plan (SIP) is one of the most preferred strategies for investing in mutual funds, and in this guide, we will break down everything you need to know to pick an SIP that fits your goals, comfort levels, and lifestyle. 

We’ll explain fund types, performance metrics and fees, and understand the advantages of investing in an SIP. Our goal is to help ensure that by the end of this article, you feel confident making decisions based on solid research. Let’s start!

What Is An SIP?

An SIP is a smart, structured way to invest in mutual funds with small, regular amounts instead of a single large sum. Let’s understand this with an example: 

With an SIP, you decide on a fixed amount, like ₹500 or ₹1,000, or more, and invest it monthly, quarterly, weekly or even daily into a mutual fund of your choice. The instalment automatically gets debited from your bank account and buys fund units based on that day’s Net Asset Value (NAV).

Since you invest at regular intervals, you end up buying more units when NAVs are low and fewer units when they’re high. Over time, this smooths out your purchase price and reduces the risk of investing a lump sum at the wrong moment. It essentially means that you don’t have to worry about timing the market with SIPs. 

SIPs are like setting a recurring date with your future self. They’re automatic and consistent, helping you save without thinking. This makes them an ideal option for busy lives or when emotions might tempt you to skip investing. 

Another factor that makes SIP a great investment strategy is that most schemes let you begin with a small amount. You can also pause, increase or stop your SIP anytime, giving you full control over your investment according to your life stage.

In short, an SIP is a hassle-free, flexible, and disciplined way to invest in mutual funds with small amounts. It helps reduce market timing risks, builds financial habits, and can reap long-term rewards.

How To Choose The Right SIP

Now that you know what an SIP is, let’s understand how to choose the right SIP plan: 

1. Define Your Financial Goals

Begin by getting clear on what you’re trying to achieve. Is it a vacation, postgraduate studies, early home ownership, or building for future stability?

If you have short-term goals, lean towards debt or hybrid mutual funds as they are less volatile and involve lower risk. But if your goals are long-term, equity funds could offer better returns, with higher risk. Understanding your financial goals will help you select funds suited to your timeline, not someone else’s.

2. Assess Your Risk Appetite

How do you handle market fluctuations?

  • Low Tolerance: Debt or conservative hybrid funds may suit you.
  • Comfortable with Ups and Downs: Equity funds could be more rewarding.

Make sure that you pick a fund that you can emotionally ride through its highs and lows without falling into the trap of FOMO.

3. Compare Fund Performance Over The Years

You should always check how a fund has historically performed in the long run. Look for long-term returns instead of the latest gains. Focus on 5-year and 10-year performance, since those reflect consistency. You can use these historical returns to choose funds that match your goals and comfort zone.

4. Let CRISP by Share.Market Do the Heavy Lifting 

If you feel overwhelmed by rankings, charts, past returns, and other complicated data related to mutual funds, then CRISP is for you. CRISP is a first-of-its-kind mutual fund evaluation tool offered by Share.Market. It is a data-driven framework built for investors who want to make wise investment choices without doing the research themselves. 

CRISP will ensure that you know if the mutual fund you want to invest in is reliable or not, and if it aligns with your financial goals and risk tolerance. More than that, it will also provide a clear summary of fund performance, comparative risk, and other relevant information related to the fund. You can count on CRISP to do the extensive research and find the best SIP mutual fund for you!

Investing With The Right Amount

Finding “the right” SIP amount depends on income, goals and budget. You can follow the 50/30/20 rule to decide the right amount for yourself. This is how the 50/30/20 rule suggests you should divide your income: 

  • 50% essentials
  • 30% lifestyle/fun
  • 20% savings/investments

So, if you earn ₹50,000/month, aim to put ₹10,000 into investments, which includes SIP. The trick is to start small. Even a ₹100/month can have a snowball effect with the power of compounding. 

You can use an SIP calculator to help forecast the growth of your SIP investment for different monthly amounts.

Benefits Of SIP

Wondering why you should invest in a mutual fund using SIP? Here’s why: 

Rupee Cost Averaging

With SIPs, you invest a fixed amount at regular intervals regardless of market conditions. This lets you buy more units when prices are low and fewer when they’re high, which smooths out the average purchase price over time . It essentially removes the stress of trying to time the market and helps reduce average investment cost.

Power of Compounding

SIP returns are reinvested and earn returns themselves, meaning “returns on returns.” Over long periods, this compounding effect can turn small investments into substantial wealth. For example, disciplined SIPs over decades can outperform one-time lump-sum investing due to exponential growth through compounding.

Disciplined Investing Habit

By automating monthly investments, SIPs turn the act of saving into a habit. You don’t need to decide each month whether to invest, as it just happens . This discipline is crucial, especially when emotions or market volatility could otherwise derail consistency.

Financial Flexibility & Ease

Most funds allow you to start with as little as ₹100 per month. You can also pause, increase, decrease, or stop the SIP at any time without penalty. This flexibility ensures SIPs stay aligned with your life changes or short-term cash needs.

Accessibility & Low Entry Barrier

SEBI’s push for bite-sized SIPs is aimed at expanding access to investing in mutual funds by making it feasible for more and more people. You don’t need a fat wallet to start building wealth. It’s perfect for students, young professionals, and first-time investors.

Convenient, Time-Saving Investing

Once you set up your SIP, it runs on autopilot each month. You save time and mental bandwidth as you don’t have to decide when or how much to invest.

Conclusion

Choosing the best SIP plan isn’t about finding the “magic” scheme; it’s about choosing deliberately based on goals, risk, fund quality, cost, and monitoring consistently. We hope this guide helped you understand how to pick the best SIP plan for 2025, and if you want to start a SIP today, head on to Share.Market where you will be able to invest with unmatched convenience. 

FAQs

1. What Is The 50/30/20 Rule?

It’s a budgeting rule that says you should spend 50% of your income on needs, 30% on wants, and put 20% into savings/investments. It helps maintain a healthy balance between living well and building your future.

2. How Do I Choose A Good SIP Plan?

You should pick a fund matching your goal and risk profile. To make this process easier, we have curated a Best SIP fund list on Share.Market. 

3. How To Start SIP For Beginners?

Here’s how you can start: 

  1. Figure out your goal and risk level.
  2. Shortlist 2–3 funds, say one large-cap and one hybrid.
  3. Compare returns, costs, and ratings.
  4. Start investing in mutual funds by setting up an auto SIP.

4. Can I start SIP with ₹100?

Yes! Some funds do allow SIPs from ₹100/month. Starting small will still give you compounding benefits.

5. What is a Step-Up SIP?

A step-up SIP is nothing but a type of SIP wherein your SIP investment amount keeps increasing at a fixed interval, often semi-annually or annually.