4 ways to Decide Your SIP Amount As Per Your Income

Published : 27 September 2023

By : Sachin Gupta

Want to start a SIP but confused about what number to choose? 

You can plan the SIP amount based on your income. Here is how. 

Fixed Obligations to Income Ratio (FOIR) Method

In this method, you deduct your fixed expenses such as utility bills, rent, food expenses, etc. and invest the rest. 

50:30:20 Rule

In this, you spend 50% of your income on necessary expenses, 30% on your wants, and the rest 20% is invested. From this 20%, based on your preferences, you can invest in a SIP of your choice. 

A Fixed %

In this method, you decide on a certain percentage such as 5% or 10% of your income to invest in a SIP. However, do consider portfolio diversification and invest as per your risk appetite.  

Decide Based on Goals

Goals can be short-term (buying a car) or long-term (buying a house). You can decide to divide income for this goal in a ratio of 50:50. Note that this is an investment amount, already separated from income, i.e. 20% of your income if the 50:30:20 rule is followed.