What is SIP (Systematic Investment Plan)?

SIP (Systematic Investment Plan) is a disciplined way of investing a fixed amount regularly (monthly or quarterly) in mutual funds. SIP allows investors to build wealth gradually while benefiting from market growth and compounding.

SIP is one of the most popular investment options in India for long-term goals such as retirement, children’s education, and wealth creation.

How Does SIP Work?

In SIP, a fixed amount is automatically invested in a mutual fund at regular intervals. More units are purchased when markets are low and fewer units when markets are high. This concept is known as rupee cost averaging.

• Invest small amounts regularly
• Benefit from market volatility
• Long-term compounding increases returns

Types of SIP

• Regular SIP: Fixed amount invested monthly
• Top-Up SIP: Investment amount increases periodically
• Flexible SIP: Amount varies based on cash flow
• Perpetual SIP: No fixed end date

Benefits of SIP Investment

• Encourages disciplined savings
• Affordable for beginners
• Power of compounding
• Rupee cost averaging
• Highly flexible and liquid

SIP vs Lump Sum Investment

SIP reduces market timing risk compared to lump sum investment. It is ideal for salaried individuals who prefer investing monthly.

SIP Returns Example

If you invest ₹5,000 per month for 10 years at an average return of 12%:

• Total Investment: ₹6,00,000
• Estimated Maturity Value: ₹11–12 lakh

Who Should Invest in SIP?

• Beginners in investment
• Long-term investors
• Salaried professionals
• Investors with moderate risk appetite

Frequently Asked Questions

Is SIP safe?
SIP invests in mutual funds and carries market risk, but long-term investment reduces risk.

Can SIP be stopped anytime?
Yes, SIP can be paused or stopped without penalty.

What is the minimum SIP amount?
Most SIPs start from as low as ₹500 per month.