Ask ET Mutual Funds: How to start an SIP to invest for short term?

I am very new and a fresher to mutual funds. I would like to start investing in mutual fund SIP for short term. Please guide.

--Naga Santosh K

A Systematic Investment Plan (SIP) is a mode of investing in mutual fund schemes. You invest a specified amount (on a daily, weekly, monthly, quarterly or bi-annually basis) via SIP in a mutual fund scheme of your choice. Most mutual fund advisors recommend investing through SIP in equity mutual funds because it helps investors invest regularly without worrying about the conditions prevailing in the market.

Also, it helps to average the purchase cost and maximise returns. However, investing in debt mutual funds through SIPs just helps you to invest regularly. Since they are not as volatile as equity schemes, you would not benefit from volatility and averaging of purchase cost.


Since you have a short-term investment horizon, you may consider investing in debt mutual fund schemes. However, you will have to pick a scheme based on your exact investment horizon and risk tolerance. Here is a primer on debt mutual fund schemes.

You can start an SIP in an equity scheme if you have an investment horizon of five to seven years. They are ideal to meet your long-term financial goals. Here is a primer on equity mutual funds. Choose a scheme based on your risk appetite.

You may also take look at our recommended equity mutual fund portfolios.

(If you have any mutual fund queries, message ET Mutual Funds on Facebook . We will get it answered by our panel of experts.)