A Systematic Investment Plan (SIP) lets you invest a fixed amount in a mutual fund at regular intervals, usually every month, by automatic debit from your bank account. It is one of the simplest ways to start investing.
How a SIP works
Each instalment buys units of the fund at that day's price. When prices are low you get more units; when prices are high you get fewer. Over time this averages out your purchase cost, which is called rupee-cost averaging.
An example
Suppose you invest ₹10,000 a month for 10 years, a total of ₹12 lakh. If the investment earned 12% a year, it could grow to about ₹23.2 lakh. If it earned less, or if markets fell near the end, it would be worth less. Returns are not guaranteed; the figures only show how compounding works.
Why SIPs suit beginners
- Discipline: investing happens automatically every month.
- Small start: many SIPs can begin from a few hundred rupees.
- No timing: you do not need to guess the "right" moment to invest.
- Flexibility: you can usually increase, pause or stop a SIP.
Getting started
- Decide what you are investing for and when you need the money.
- Complete KYC with your PAN, Aadhaar and bank details.
- Choose a scheme that matches your goal and comfort with risk.
- Set up the SIP and review it once a year; consider stepping it up as your income grows.
Try our SIP calculator or step-up SIP calculator, or read about SIP investment.
This article is for general education only and is not personal financial, tax or legal advice.
Mutual fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not indicative of future returns.