The oxygen mask rule
On a plane, you put on your own oxygen mask first. In investing, build your emergency fund first, then invest. You can't build wealth if a medical emergency forces you to sell at a loss.
How Much to Invest
The 50-30-20 Rule
A simple budgeting framework:- 50% — Needs (rent, groceries, EMIs)
- 30% — Wants (dining, entertainment, shopping)
- 20% — Savings & Investments
Before You Invest: Emergency Fund First
Keep 6 months of expenses in a liquid fund or savings account before starting equity SIPs. This ensures you won't have to sell your equity investments during a crisis. Example: Monthly expenses ₹30,000 → Emergency fund = ₹1,80,000.
Age-Based Equity Allocation
A rough rule of thumb: Equity % = 100 - Your Age
| Age | Equity | Debt |
|---|---|---|
| 25 | 75% | 25% |
| 35 | 65% | 35% |
| 45 | 55% | 45% |
| 55 | 45% | 55% |
Build your emergency fund (6 months of expenses)
Start a SIP with whatever you can afford — even ₹500/month
Increase your SIP by 10% every year (step-up SIP)
As your income grows, push toward the 20% savings target
The Power of Step-Up SIP
A ₹5,000 SIP with 10% annual step-up for 20 years at 12% return = ₹76 lakh. Without step-up, the same SIP gives only ₹49.9 lakh. That's ₹26 lakh extra just by increasing ₹500/year.
Common Mistake
Waiting for the "perfect time" or "enough money" to start. Time in the market beats timing the market. ₹500/month started today beats ₹5,000/month started 5 years later.
Your Next Step
Use our SIP Calculator to model different amounts and see how step-up SIP multiplies your wealth.