What Is a SIP?
A Systematic Investment Plan (SIP) allows you to invest a fixed amount in a mutual fund at regular intervals — typically monthly. SIPs make investing disciplined and accessible, letting you start with as little as ₹500 per month. They benefit from rupee cost averaging, automatically buying more units when prices are low and fewer when prices are high.
SIP Returns Formula
FV = P × [(1 + r)^n − 1] / r × (1 + r)
Where: P = Monthly investment | r = Monthly return rate | n = Number of months
Where: P = Monthly investment | r = Monthly return rate | n = Number of months
SIP Power: Monthly ₹5,000 at 12% Return
| Duration | Invested | Returns | Wealth Gained |
|---|---|---|---|
| 5 years | ₹3,00,000 | ₹4,12,432 | +₹1,12,432 |
| 10 years | ₹6,00,000 | ₹11,61,695 | +₹5,61,695 |
| 20 years | ₹12,00,000 | ₹49,95,740 | +₹37,95,740 |
| 30 years | ₹18,00,000 | ₹1,75,27,052 | +₹1,57,27,052 |
Advantages of SIP Investing
- Rupee cost averaging: Automatically buys more units during market dips
- Disciplined saving: Auto-debit prevents impulse spending
- No market timing needed: Removes emotion from investment decisions
- Flexible: Start, stop, increase, or decrease anytime
- Tax efficient: ELSS SIPs qualify for Section 80C deduction up to ₹1.5 lakh/year