How to Do SIP in Equity – A Step-by-Step Guide

Systematically Build Wealth in Stocks Without Worrying About Market Timing!

In my previous blog, we discussed why SIP (Systematic Investment Plan) is the best approach for long-term investing and why market crashes should be seen as opportunities rather than reasons to panic.

Many readers asked: "How can I systematically invest in individual stocks, just like SIP in mutual funds?"

Great question! Equity SIP is one of the most powerful ways to build wealth over time, but it must be done correctly.

In this guide, I’ll break it down step by step.

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Step 1: Decide How Much to Invest in SIP

The first question is: How much should you allocate to equity SIP every month?

A general rule of thumb:
✅ Between 5% to 10% of your monthly earnings
✅ Or 15% to 40% of your savings, depending on your age

📌 Younger Investors (Below 30 Years) – Can allocate up to 40% of their savings in equity since they have a longer investment horizon.
📌 Middle-Aged Investors (30-55 Years) – Can keep it around 20% to 30% of their savings depending on their financial stability.
📌 Older Investors (55+ Years) – Should restrict their equity SIP to 15% or less and consider diversifying into safer assets like Fixed Deposits (FDs) and Gold Funds.

💡 Pro Tip: Always keep a balance—don't invest all your savings in equity. Consider asset allocation between equity, fixed-income (FDs, bonds), and gold funds for diversification.

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Step 2: Choose Your Equity Investment Approach

Once you've decided on the amount, the next step is to decide where to invest in equity SIP.

You have two broad options:

1️⃣ Safe Approach – 100% Large Cap (Nifty 50 Companies)

• If you are a safe investor looking for lower risk, you can allocate your SIP entirely into the top large-cap companies (Nifty 50).

• This approach provides stable and steady returns over time.

2️⃣ Balanced Approach – Mix of Large-Cap & Mid-Cap

• If you want to increase your potential returns from 20% to 50%, you can diversify your SIP into both large-cap and mid-cap stocks.

• This strategy offers a balance between safety and higher returns.

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Step 3: Select Sectors for Your SIP Portfolio

The stock market has 15-16 key sectors, but you don’t need to invest in all of them.

👉 Pick 6-7 sectors that you understand or believe will perform well in the future.

For example, sectors like:
✅ Banking & Financial Services
✅ Information Technology
✅ Healthcare & Pharmaceuticals
✅ Consumer Goods & FMCG
✅ Automobiles & EVs
✅ Infrastructure & Real Estate
✅ Energy & Renewables

💡 Why This Approach Works?

• It reduces risk by spreading your investments across multiple sectors.

• You don’t overexpose yourself to a single sector downturn.

• You participate in multiple growth opportunities across industries.

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Step 4: Pick Stocks Within Each Sector

Now that you've selected your sectors, the next step is to choose stocks for your SIP.

A simple two-layer strategy works well:

1️⃣ Pick One Large-Cap Stock from Each Sector – These are well-established companies with a strong track record.
2️⃣ Pick One Mid-Cap Stock from Each Sector – These have higher growth potential but slightly higher risk.

📌 For Example: If you chose 6 sectors, your SIP portfolio could have 12 stocks (6 large-cap + 6 mid-cap), ensuring diversification and growth potential.

💡 No Fixed Formula, But This Gives a Clear Structure
There is no single correct way to do an equity SIP, but this method ensures you invest systematically and avoid random stock picking.

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Step 5: Automate Your SIP Investments

To stay disciplined, set up:
✅ SIP Orders in your brokerage account (if available)
✅ Reminders to manually invest at fixed intervals (if SIP orders are not available)
✅ Standing Instructions in Your Bank to transfer funds to your demat account

💡 Pro Tip: Automating your SIP prevents you from missing investments due to market noise or emotions.

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Step 6: Review and Rebalance Every 6-12 Months

SIP is a long-term strategy, but you must review your portfolio regularly to:
🔹 Ensure the companies are still fundamentally strong.
🔹 Identify if any stock has significantly underperformed due to poor business decisions.
🔹 Rebalance if a sector is over- or underperforming.

🚨 However, avoid over-monitoring! Checking every day will only increase anxiety. A review every 6-12 months is enough.

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Final Thoughts – Should You Start SIP in Stocks?

📌 Stock SIP is an excellent way to accumulate quality stocks systematically.
📌 It removes emotions, eliminates market timing stress, and helps you build wealth over time.
📌 If done correctly, it can generate long-term wealth while minimizing market volatility risks.

So, are you ready to start your SIP in stocks? 🚀

Drop a comment below and let me know if you have any questions!👇

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