A method of investing a fixed amount in a mutual fund at regular intervals — weekly, monthly, or quarterly.
A Systematic Investment Plan (SIP) allows you to invest a predetermined amount in a mutual fund scheme at regular intervals. Instead of a large one-time investment, you spread it over time, buying more units when prices are low and fewer when prices are high.
SIP is like a recurring deposit for mutual funds. You set up an auto-debit of, say, ₹5,000 every month. This amount buys units of your chosen fund at that month's NAV. Over time, this disciplined approach averages out your purchase cost and builds a corpus through the power of compounding.
You choose a fund, a fixed amount (minimum ₹100 or ₹500 for most funds), and a frequency (monthly is most common).
On the SIP date, the amount is auto-debited from your bank and units are allotted at that day's NAV.
Because the amount is fixed, you buy more units when NAV is low and fewer when it's high — this is rupee cost averaging.
Your total units accumulate over time, and the investment grows as NAV rises.
Monthly SIP: ₹10,000 Tenure: 10 years Assumed annual return: 12% Total invested: ₹12,00,000 Estimated corpus: ~₹23,00,000 The ~₹11 lakh extra is entirely from compounding — your money working on itself over time.