Systematic Investment Plan (SIP)
Monthly investing in mutual funds.
What does it mean? (Simple)
SIP is a way to invest in mutual funds by putting in a fixed amount every month (like ₹1,000 or ₹5,000) instead of investing a large sum at once.
The main benefit is "rupee cost averaging": when prices are low, your SIP buys more units; when prices are high, it buys fewer. Over time, this averages out the cost and reduces timing risk.
You can start a SIP with as little as ₹500/month in most mutual funds through apps like Groww, Zerodha, or Paytm Money.
Example with ₹ numbers
You invest ₹5,000/month via SIP in an index fund for 10 years. If the fund grows at 12% annually, your ₹6 lakh investment could grow to approximately ₹11.5 lakh.
Common mistakes to avoid
- ⚠️Stopping SIP during market crashes (that is actually the best time)
- ⚠️Choosing funds based on past 1-year returns only
- ⚠️Not reviewing fund performance annually
Related terms
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⚠️ Educational only: This explanation is for learning purposes. Please consult a financial advisor for personalized advice.