The effect of investing a fixed amount regularly, which automatically buys more units when prices are low and fewer when high — reducing average cost per unit over time.
Rupee Cost Averaging (RCA) is the mathematical outcome of investing a fixed rupee amount at regular intervals regardless of market conditions. When NAV is low, you buy more units; when NAV is high, you buy fewer. Over time, the average purchase price tends to be lower than the simple average NAV over the same period.
You invest ₹10,000 every month no matter what. Month 1 at NAV ₹100 → 100 units. Month 2 markets fall, NAV ₹80 → 125 units. Month 3 markets recover, NAV ₹110 → 90.9 units. You bought more when cheap, fewer when expensive — without any decision-making.
Fix a monthly SIP amount and let it run through market cycles without stopping.
When markets fall, the fixed amount buys more units at lower prices.
When markets rise, the same amount buys fewer units, naturally limiting overexposure at peaks.
The average cost of accumulated units is typically below the time-weighted average NAV.
Monthly SIP: ₹10,000 Month 1: NAV ₹100 → 100.00 units Month 2: NAV ₹80 → 125.00 units Month 3: NAV ₹110 → 90.91 units Total invested: ₹30,000 Total units: 315.91 Average purchase cost: ₹94.96/unit Simple average NAV: ₹96.67/unit Saving: ₹1.71/unit — you paid below average without any market timing.