# How to start investing in India: a step-by-step guide for beginners

Source: https://koshex.com/blog/how-to-start-investing-a-beginners-guide · Published 10 January 2023 · 9 min read

To start investing, first keep a few months of expenses aside for emergencies and clear high-interest debt such as unpaid credit card dues. Then write down each goal with a date, check how much of a fall you can sit through, and finish KYC. Match the first investment to the date, and make it a monthly habit.

## Key takeaways

- Keep emergency money aside; Koshex's view is to clear high-interest debt, such as unpaid credit card dues, before you invest.
- Give each goal a rupee amount and a date, because the date decides what kind of investment fits.
- In March 2020 the NIFTY 50 index fell 38.4% in about ten weeks, so choose a risk you could sit through.
- Complete KYC once, then start a SIP or a one-time investment; Koshex's app accepts both from ₹100.
- Keep the SIP running and review once a year; change only when a goal or your life changes.

You do not need to know anything about markets to start investing. You need an order of steps. It is easy to pick a product first and think about emergencies, debts and dates later. This guide goes the other way round: sort out the ground under your feet, decide what the money is for, then choose the first investment.

If you want a map of every option instead (fixed deposits, small savings, funds, gold, bonds, shares, property), read [investment options in India](https://koshex.com/blog/investment-options-in-india). This page is about what to do first.

## What counts as an investment?

An investment is money you put into something that you expect to grow or pay you, knowing its value can fall. That last part is what separates it from saving.

Money in a savings account does not rise and fall with a market. DICGC deposit insurance covers savings and other bank deposits up to ₹5,00,000 per depositor per bank, principal and interest together. Prices rise over time, so idle cash buys less each year. [Savings and investments](https://koshex.com/blog/difference-between-savings-and-investments) are two different jobs, and [inflation](https://koshex.com/blog/inflation-definition) is the reason the second job exists.

Investments fall into three broad kinds:

- **Owning**: shares of companies (that is **equity**), gold or property. You hold a piece of something, and its price moves.
- **Lending**: fixed deposits, bonds and debt funds. **Debt** means loans to governments, banks or companies. You are paid interest for lending.
- **Cash-like**: a savings account or a liquid fund, where the aim is to keep money handy rather than to grow it.

A **mutual fund** is a pool of money from many people, invested by a professional manager under SEBI rules. Depending on its type, a fund may own, lend or hold cash-like paper. When the prices of what the fund holds move, the value of your units moves too. No one can promise you a fixed return from it.

## What should you sort out before you invest?

Two things come first: money for emergencies, and any expensive debt.

**Emergency money** is a cushion you keep aside for sudden expenses, such as a medical bill or a lost job. Without it, a surprise can force you to sell an investment on a bad day, or make you stop your monthly investing. Funds also take time to pay out. SEBI's rule is that sale proceeds reach you within 3 working days from the date of redemption. Schemes with at least 80% in permissible overseas investments get 5 working days. A fund is not instant cash. For how big the cushion should be, our article on [where to keep emergency savings](https://koshex.com/blog/where-should-you-keep-your-emergency-savings) says three to six months of expenses.

The second is debt. Koshex's view is: clear high-interest debt, such as unpaid credit card dues, before you invest.

## How do you set an investment goal?

Give each goal a rupee amount and a date. "Save for a house" is a wish. "₹10,00,000 for a down payment in eight years" is a goal you can plan around.

The date matters more than anything else on this page. Money you need in a year sits badly in something that can fall for months. Money you will not touch for fifteen years can sit through a fall. Write the goals down, each with its own amount and its own date, and treat them separately. Our article on [choosing a mutual fund for your goals](https://koshex.com/blog/how-to-choose-the-right-mutual-fund-for-investment-goals) goes further.

## How much risk can you take?

As much as you could watch fall without selling, and no more than the goal's date allows. Those are two limits, and the lower one applies.

A fall can be steep. The NIFTY 50, an index of 50 large companies, closed at 12,362.30 on 14 January 2020 and at 7,610.25 on 23 March 2020. That is a drop of 38.4% in about ten weeks. Someone whose holding moved with that index would have seen ₹1,00,000 turn into roughly ₹61,600 on paper. An index is a list of companies picked by fixed rules, and this was the index, not any particular fund.

Ask yourself honestly what you would have done in March 2020. Your answer tells you something about your risk tolerance. Funds carry a **riskometer**, the risk label SEBI makes every fund show, on six levels from Low to Very High and checked every month. It is worth reading before you buy.

Your **risk profile** is a summary of how much risk suits you. The Koshex app runs a free risk-profile questionnaire. For a closer look at how tolerance, capacity and appetite differ, read [what risk tolerance is and why it matters](https://koshex.com/blog/what-is-risk-tolerance-and-why-is-it-important).

## Which investment should you start with?

The one whose usual time frame matches your goal's date. Different types of fund are meant for different lengths of time, and Koshex's category pages print a suggested horizon for each.

For example, Koshex's money market funds page suggests a horizon of up to 1 year, and its large cap funds page 5 years or more. A large cap fund must keep at least 80% in the 100 biggest listed companies. On 29 September 2026, every listed large cap fund carried a Very High riskometer reading. A goal nine months away and a goal ten years away call for different answers, even for the same person.

Three short pointers:

- If safety is your first worry, read [how risk and return trade off in safe investments](https://koshex.com/blog/what-are-the-safest-investments-with-high-returns-in-india).
- An index fund follows a fixed list such as the NIFTY 50. Our [index funds page](https://koshex.com/mutual-funds/categories/index-funds) explains how it works.
- Mutual funds bought from the fund house or a distributor need no demat account, the account that holds shares or units in electronic form. Shares and ETFs do. An ETF, or exchange traded fund, is a mutual fund that tracks an index or a metal and trades on a stock exchange. If shares are what you have in mind, start with [the stock market for beginners](https://koshex.com/blog/stock-trading-newbie-heres-what-you-should-know).

## How do you make your first investment?

Complete KYC once, then buy units of a fund through the fund house or a distributor, either as a SIP or as one lump sum.

**KYC** (Know Your Client) is the identity check every investor goes through. You give your **PAN** (the permanent account number issued by the tax department), proof of identity and address, a photo and your signature. The details are stored with a KYC registration agency, called a **KRA**. Once your record is validated, another fund house, broker or depository can fetch it instead of asking you again. In the Koshex app, customers can check their KYC status and update their KYC details. The full process is in our [KYC guide](https://koshex.com/blog/mutual-fund-kyc).

A **SIP** (systematic investment plan) invests a fixed amount at regular intervals, usually monthly. Each instalment buys units at that day's **NAV**, which is the price of one unit. A **lumpsum** is a larger amount invested at one time. You can start a SIP or one-time investment from ₹100 in the Koshex app. SEBI does not set a minimum investment: each fund sets its own and prints it in its scheme documents, so check the fund you pick. For what a small start can buy, see [investing ₹1,000](https://koshex.com/blog/9-best-ways-to-invest-rs-1000). Our guides explain [how to invest online or offline](https://koshex.com/blog/how-to-invest-in-mutual-funds-online-offline-in-india) and [how a SIP works](https://koshex.com/blog/systematic-investment-plan-sip).

Koshex sells **regular plans**, the version of a fund bought through a distributor. A **distributor** is a registered intermediary that helps you buy and manage funds. Koshex helps you choose a fund that suits your goal and timeline. Koshex charges investors no platform or transaction fee. The fund's own costs are the scheme's and still apply. One is the expense ratio, the fund's yearly fee, taken out of the fund's value. Another is the exit load, a fee some funds charge if you sell within a set time after buying. If the investor is a child, read about [investing in a minor's name](https://koshex.com/blog/pros-cons-of-investing-in-mutual-funds-in-a-minors-name).

## How should you start investing on a first salary of ₹30,000?

Start with the order above, on a small monthly amount you can keep paying. Here is an illustration, not advice.

Riya is 25 and takes home ₹30,000 a month. A common budgeting rule of thumb, not a regulation, is 50:30:20. About half of take-home pay goes to needs, 30% to wants and 20% to saving and investing. On ₹30,000 that is ₹15,000 for needs, ₹9,000 for wants and ₹6,000 for saving and investing.

Riya's first job for that ₹6,000 is the emergency money. Only then does a SIP make sense. Suppose she runs a SIP of ₹3,000 a month. Take an assumed return of 10% a year. It is an assumption, not a forecast. After 10 years she would have invested ₹3,60,000, and the SIP would be worth ₹6,19,656. After 20 years, she would have invested ₹7,20,000 and it would be worth ₹22,97,091.

The 10% is below the rates AMFI uses in its own equity illustrations. Real returns will differ, and past performance may or may not be sustained in future. No fund or category is named for Riya because the right one depends on her goal's date.

You can try your own numbers in the [SIP calculator](https://koshex.com/calculators/sip-calculator). Our guide on [how much to invest in mutual funds every month](https://koshex.com/blog/how-much-should-i-invest-in-mutual-funds-every-month) covers the size of the SIP.

## How do you keep going once you have started?

Keep the SIP running, look at your investments once a year, and change something only when a goal or your life changes.

The real test is a month when the market falls. [Behavioural biases](https://koshex.com/blog/common-behavioural-biases-investors-must-avoid) are the habits of mind that can make a beginner stop then. As your pay rises, a [step-up SIP](https://koshex.com/blog/step-up-sip) raises the instalment on a schedule you set.

Koshex reviews your holdings over time and flags changes. Its net-worth tracking can include investments you hold outside Koshex, and is a way to review your portfolio. For what to check in a review, see [building a long-term portfolio](https://koshex.com/blog/building-long-term-portfolio).

## Frequently asked questions

### How do I start investing as a beginner?

To start investing, first keep a few months of expenses aside for emergencies and clear high-interest debt such as unpaid credit card dues. Then write down each goal with a date, check how much of a fall you can sit through, and finish KYC. Match the first investment to the date, and make it a monthly habit.

### How much money do I need to start investing?

SEBI does not set a minimum investment, and buying even one share needs a demat account and a trading account. You can start a SIP or one-time investment from ₹100 in the Koshex app, and Koshex digital gold also starts from ₹100. Digital gold is not regulated by SEBI: in November 2025 SEBI said such products are "neither notified as securities nor regulated as commodity derivatives". SEBI also said its investor-protection mechanisms do not apply to them, but gold ETFs and gold mutual funds are SEBI-regulated.

### Should I pay off my loan before I start investing?

Koshex's view is to clear high-interest debt, such as unpaid credit card dues, before you invest. For other loans, compare what the loan costs you with what you hope the money could earn. No one can promise that second figure. Your goal's date and your emergency money also count.

### Do I need a demat account to start investing?

Not for mutual funds bought from the fund house or a distributor. A demat account holds units in electronic form, and is needed to trade listed units on a stock exchange. Shares and ETFs need a demat account and a trading (or broking) account with a SEBI registered stock broker. A bank account is needed too.

### Can I start investing as a student or before I turn 18?

Under 18, yes, through a guardian; from 18 you complete your own KYC and invest in your own name. SEBI's rule lets payment come from the minor's, parent's or legal guardian's bank account, or the minor's joint account with either. Fund houses' rules make the minor the first and sole holder. A guardian can invest in a minor's name on Koshex; the guardian uses the app and makes the decisions.

### Is investing safe for a beginner?

No investment is free of risk. The value of a mutual fund scheme may go up or down as the prices of the securities it holds, and interest rates, change. SEBI's Investor Charter tells investors: "Do not fall for the promise of indicative or exorbitant or assured returns". Match the risk to your goal's date and read the riskometer.

### Do I have to pay tax on my first investment?

In the growth option, which pays nothing out, gains are taxed when you sell, and no tax is deducted at source for a resident. An equity-oriented fund holds at least 65% in Indian listed shares, and securities transaction tax is charged when you sell its units. Under the Income-tax Act, 2025, gains on its units held 12 months or less, sold with securities transaction tax paid, are taxed at 20%. Held longer, with securities transaction tax paid, the gain on such units is taxed at 12.5% on the amount above ₹1,25,000 a tax year.

*This article explains how things work; it is not advice to buy or sell any investment. Mutual fund investments are subject to market risks, read all scheme related documents carefully.*