Investing: matching money to time

What should I do before starting to invest?

Three things come first: an emergency fund, no revolving credit card balance, and term insurance if anyone depends on your income. Investing before these is building on sand.

Timeline decides the instrument

This single table prevents most investing mistakes.

What a SIP is, and is not

A Systematic Investment Plan is an instruction to invest a fixed amount on a fixed date — nothing more. It is not a product, it does not guarantee a return, and it does not protect you from falls. What it does is remove timing decisions and buy more units when prices are low.

Compounding needs years, not cleverness

Growth on growth is slow and then sudden. The bulk of a long investment's final value is created in its final years, which is exactly why starting earlier beats contributing more later.

Index funds are a reasonable default

A low-cost fund tracking a broad index gives you the whole market at a fraction of the fee. Every percentage point of expense ratio compounds against you exactly as returns compound for you.

Keep it boring

Choose an allocation you can hold through a 30% fall, automate it, and review once or twice a year. Frequent switching is the most reliably expensive habit in personal investing.

Use the SIP calculator to model assumptions, not to predict returns. Read SIP versus lump sum investing for how the source of your money changes the decision. SEBI Investor explains investment risks and how to check registered intermediaries. North is a learning and planning companion, not an investment platform.