What is a SIP?

A Systematic Investment Plan, or SIP, is a way of investing a fixed amount of money into a mutual fund scheme at regular intervals — typically monthly — instead of investing a large sum all at once. You choose the amount, the frequency, and the scheme, and the investment is usually debited automatically from your bank account on a chosen date.

How a SIP works

Each instalment buys units of the chosen mutual fund scheme at that day's applicable Net Asset Value (NAV). Because the amount is fixed but the NAV moves up and down over time, a SIP tends to buy more units when prices are lower and fewer units when prices are higher — a pattern often referred to as rupee-cost averaging. Over a long period, this can help smooth out the effect of short-term market ups and downs, though it does not eliminate risk or guarantee a profit.

Why people use SIPs

• They build a regular investing habit without requiring a large sum upfront.
• They align well with regular income, such as a monthly salary.
• They remove the pressure of trying to time the market for a single lump-sum entry.
• They can be started, paused, increased, or stopped, depending on the scheme's terms.

Mutual fund investments, including SIPs, are subject to market risks. The value of your investment can go up or down, and past performance of any scheme does not guarantee future results. Read all scheme-related documents carefully, and speak with a distributor or adviser about which approach suits your goals and risk profile.