SIP for Salaried Employees — Invest First, Spend What Is Left

There is no universal figure, but there is a sensible band: most salaried investors land between 10% and 20% of take-home pay. The right number inside that band is not the largest one you can manage in a good month — it is the one you could still honour in a month with a medical bill and a wedding in the family.

This matters more than it sounds. A SIP that runs untouched for a decade does its job; a larger one that gets cancelled in month nine does not. When investors come to us having stopped a previous SIP, the reason is almost never the fund — it is that the instalment was set at an optimistic number during a confident month.

If you are starting out, begin at the lower end of the band deliberately. It is far easier to raise an instalment you are comfortable with than to restart one you had to cancel, and the increase can be tied to your next appraisal so it never has to come out of your current budget.

New investors spend weeks choosing a scheme and about four seconds choosing a date. The date deserves more attention, because it decides whether the instalment competes with your spending or precedes it.

Set it for one to three days after your salary credit. Money that leaves before the month begins is money you never had to resist. Money scheduled for the twenty-fifth is money you have already mentally allocated to something else, and that is the instalment that eventually bounces.

Two related settings are worth getting right at setup. Keep the e-NACH mandate ceiling comfortably above your current instalment so that raising it later does not require fresh paperwork. And make sure the account you use for the mandate is the one your salary actually lands in, not a secondary account you top up manually — an extra manual step is an extra chance for the debit to fail.

A SIP fixed at one amount for a decade quietly shrinks. Your income rises, prices rise, and the instalment stays where it was — so in real terms you are investing less every year while feeling like you are doing the same thing.

The fix is one decision a year. When the appraisal letter arrives, raise the SIP before the raise reaches your spending. A step-up can even be automated at setup so it happens on a fixed date each year without you doing anything.

The reason to link it to the appraisal specifically is behavioural: an increase you never experienced as disposable income is not felt as a cut. Wait three months and the same money has already become a subscription, an EMI or a lifestyle change, and moving it into an investment then feels like a sacrifice. The free SIP calculator lets you compare a flat instalment against a stepped-up one on your own figures.

The most common way a good SIP dies is not a market crash — it is a hospital bill, a job gap or an urgent family expense arriving in a month when there is no cash. With nowhere else to turn, the investor redeems the equity SIP, and often does it at exactly the wrong moment.

So the order matters. Build a buffer of roughly six months of expenses in something liquid and boring first. It will not excite anyone, and that is the point — its job is to absorb shocks so the long-term investment never has to. Only after that buffer exists should the equity SIP take the larger share of your monthly commitment.

If you already have investments scattered across old folios and are not sure what you hold, that is worth sorting before adding anything new. We help with consolidation as part of the same conversation. To see how a SIP behaved through past market falls before you commit, run a window through the backtest simulator.