Systematic Investment Plan (SIP) in India

A Systematic Investment Plan (SIP) is a disciplined way of investing in mutual funds where investors contribute a fixed amount at regular intervals (monthly, quarterly, etc.). It helps in wealth creation over time by leveraging rupee cost averaging and compounding.

Key Features of SIP

1. Disciplined Investing: Automates investments to encourage financial discipline.
2. Affordable: Start with as little as ₹100 or ₹500 per month.
3. Rupee Cost Averaging: Reduces market volatility impact by buying more units when prices are low and fewer units when prices are high.
4. Power of Compounding: The longer you stay invested, the higher the returns due to compounding.
5. Flexibility: Choose between monthly, quarterly, or weekly SIPs.
6. Diversification: Invests across different asset classes, reducing risk.
7. Tax Benefits: SIPs in ELSS (Equity Linked Savings Scheme) offer tax deductions under Section 80C.

Types of SIP

1. Regular SIP – Fixed investment at a chosen interval.
2. Top-up SIP – Increase SIP amount at fixed intervals.
3. Flexi SIP – Adjust investment amount based on market conditions.
4. Trigger SIP – Start or stop based on market movements.
5. Perpetual SIP – No fixed end date; continues until manually stopped.

SIP Investment Calculator Example
Let’s say you invest ₹10,000 per month in an SIP for 20 years at an expected return of 12% CAGR.

1. Total Investment: ₹24,00,000
2. Estimated Returns: ₹98,92,000
3. Total Corpus: ₹1,22,92,000