Benefits of SIPs

What are SIPs (Systematic Investment Plans)?

A Systematic Investment Plan (SIP) is a disciplined approach to investing in mutual funds or market-linked funds. Through SIPs, investors can allocate a fixed sum of money regularly—monthly, quarterly, or annually—into a fund scheme of their choice. This method promotes consistent investing and helps build wealth over time by using the principles of rupee cost averaging and the power of compounding.

SIP Calculator

I know my investment amount I know my goal amount

Monthly SIP Yearly SIP Lumpsum

I want to invest Pro Tip

Financial experts suggest that a person should invest 10-15% of their monthly income for long-term financial growth

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I want to invest for Pro Tip

Financial experts suggest that individuals should ideally invest for a period of 5 to 10 years, or even longer, to maximize the benefits of compounding and navigate market fluctuations effectively

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Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

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Total Wealth ₹22.4 L

View Plans

I want to save

I want to invest for Pro Tip

Financial experts suggest that individuals should ideally invest for a period of 5 to 10 years, or even longer, to maximize the benefits of compounding and navigate market fluctuations effectively

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Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

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Monthly Investment ₹22.4 L

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Top Funds with High Returns (Past 7 Years)

18.11%

High Growth Fund

17.8%

Top 200 Fund

13.97%

Accelerator Mid-Cap Fund II

14.53%

Opportunities Fund

9.16%

Equity II Fund

12.86%

Accelerator Fund

14.32%

Growth Opportunities Plus Fund

15.24%

Multiplier

11.57%

Equity Top 250 Fund

12.76%

Future Apex Fund

12.02%

Opportunities Fund

14.09%

Frontline Equity Fund

15.2%

Virtue II

10.49%

Pension Dynamic Equity Fund

12.03%

Equity Optimiser Pension

10.05%

Blue-Chip Equity Fund

Benefits of SIPs

Below are the benefits of SIPs (Systematic Investment Plans): 

• Disciplined Investing: SIPs encourage consistent investment habits, helping you save and invest regularly without worrying about market timing.

• Affordability: You can start with small amounts (e.g., ₹500), making it accessible to investors with varied budgets.

• Rupee Cost Averaging: By investing a fixed amount regularly, you buy more units when prices are low and fewer units when prices are high, reducing the impact of market volatility.

• Power of Compounding: Regular investments and reinvestment of returns over time help grow your wealth exponentially.

• Convenience and Flexibility: SIPs are hassle-free, automated, and can be customized based on your goals and budget. You can increase, decrease, or stop investments as needed.

• Goal-Based Planning: SIPs can help you systematically achieve financial goals like retirement planning, education funding, or buying a home.

• No Need to Time the Market: SIPs eliminate the stress of predicting market highs and lows, making them ideal for long-term wealth creation.

• Diversification: Investing through the best SIP plans in mutual funds or market-linked funds provides exposure to a diversified portfolio, spreading risk across various asset classes.

How Does SIP Work?

A Systematic Investment Plan (SIP) allows you to invest a fixed amount in a mutual fund or market-linked fund scheme at regular intervals. Here's how it works:

• Fixed Contribution: You decide the amount (e.g., ₹500, ₹1000) and the frequency (monthly, quarterly, etc.) of your investment. This amount is automatically deducted from your bank account.

• Units Allocation: The amount is used to purchase mutual fund or market-linked fund scheme units based on the fund's Net Asset Value (NAV) on the investment date.

  • If the NAV is low, you get more units.

  • If the NAV is high, you get fewer units.

• Rupee Cost Averaging: This strategy helps you navigate market fluctuations by averaging out the cost of units over time, reducing the risk of market timing.
• Power of Compounding: Over time, your returns are reinvested, and you earn returns on your investment plus the reinvested returns, amplifying wealth growth.
• Flexibility: You can modify the SIP amount, pause, or stop it at any time, offering control over your investments.
• Goal-Based Approach: SIPs align with specific financial goals like retirement, education, or wealth creation. Regular investments help achieve these goals systematically.

Things to Consider Before Investing in SIPs

• Investment Goals: Clearly define your financial objectives—whether it’s retirement planning, funding education, or buying a home. Choose SIPs that align with your goals.

• Risk Tolerance: Determine your risk appetite. Equity funds are riskier but offer higher returns, while debt funds are more stable with moderate returns.

• Investment Horizon: Determine the duration of your investment. SIPs work best for long-term goals as they mitigate short-term market volatility.

• Fund Selection: Research the past performance, consistency, and portfolio composition of mutual funds and market-linked funds to choose the right scheme.

• Cost and Charges: Check the expense ratio, exit loads, and other charges associated with the fund, as these can affect returns.

• Flexibility: Understand the flexibility options—whether you can pause, stop, or modify your SIP if needed.

• Market Volatility: Be prepared for market fluctuations. SIPs are designed to average out costs over time, so stay consistent during volatile phases.

• Emergency Funds: Ensure you have adequate savings for emergencies before starting SIPs to avoid withdrawing investments prematurely.

• Tax Implications: Be aware of taxation on mutual funds—equity funds attract short-term and long-term capital gains tax, while debt funds have different tax rules.

• Automation and Discipline: Set up automatic transfers to ensure consistent investments without missing instalments.

• Estimate Your Returns: Use an SIP calculator to estimate your potential returns and determine the right investment amount to achieve your financial goals.

Conclusion

SIPs are a reliable investment tool for building financial security and achieving long-term goals. Their structured approach, combined with flexibility and the ability to combat market volatility, makes them ideal for both novice and seasoned investors. Start early and stay consistent to make the most of your SIP journey.