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Should I opt for a smart SIP?

Revise your SIP contributions every year as your income rises, says Dhirendra Kumar

Should I go for a smart SIP instead of a conventional SIP? My goal is to create wealth over a horizon of 15 years. Out of multi-cap, mid-cap and small-cap funds, which one would you suggest?
- Vinothra

Don't go for anything smart. SIP is a very simple concept. It helps you check your emotions and don't expect any magic from it. While doing a long-term SIP in equity, the primary thing is that we are betting on the Indian economy. We are betting on a future that is brighter than today. And a period of 15 years is long enough. Despite any problems or hiccups that we have seen, equities have been rewarding over any 15-year period in the past.

The critical thing to work on is that start your SIP and enhance your SIP contribution as your income rises or as and when you are able to save more. Most of the time, we are thinking of SIP as a frozen amount, which we start with Rs 10,000 and it remains Rs 10,000 for many years. Revise it every year in line with your increasing income. Choose a multi-cap fund to start with for the next three-four years. And stick to it, don't watch it too closely. Because the moment you start looking at it too closely, you will try to over-engineer it, get anxious and sometimes try to move your money elsewhere. So, keep it simple. Start with one or two multi-cap funds and after three-four years, once you have gained confidence, spread it over small and mid caps. But not before that as they could be very unnerving.