What is SIP Investment? Complete Guide for India + SIP Calculator
SIP (Systematic Investment Plan) is an easy, smart, and disciplined method of investing fixed amounts at regular intervals (usually monthly) in mutual funds. Instead of putting all your money at once, SIP allows you to invest small sums — starting ₹100/500 monthly — helping you build wealth gradually, harness market volatility, and make your money work via compounding.
How Does SIP Work?
SIP is based on two core concepts: rupee cost averaging and the power of compounding.
When you invest a fixed sum each month, you automatically buy more units when the markets are down and fewer when they are up. This averages your purchase cost and helps avoid the risks of market timing.
As your money grows, returns are reinvested, accelerating the growth of your overall investment — especially for long-term goals.
Benefits of SIP Investments
- Disciplined Saving: Regular investing forms good saving and wealth habits.
- Low Entry Barrier: Begin investing with as little as ₹100 or ₹500 per month.
- Market Volatility Protection: Market highs and lows are balanced out, lowering overall risk.
- Compounding: The returns earned are further invested, boosting growth over time.
- Flexible & Convenient: Easy setup, auto-debit, pause or top-up if needed.
- Goal-Oriented: Invest for goals such as child’s education, home, or retirement.
- Expert Fund Management: Managed by skilled professionals at top AMCs.
Types of SIP Plans
- Regular SIP: Fixed amount invested monthly.
- Top-up SIP: Increase your SIP amount annually.
- Flexible SIP: Adjust investment as per your convenience.
- Perpetual SIP: Continue investing till you want to stop.
- Trigger SIP: Invest when your predefined condition is met.
How to Start a SIP?
- Complete KYC with PAN, Aadhaar, and address proof.
- Choose a trusted mutual fund platform or AMC (e.g. HDFC, SBI, ICICI, Groww, Zerodha).
- Select a mutual fund scheme matching your risk and goals.
- Fix the investment amount and the date for your SIP.
- Submit the SIP form (online/offline) and set auto-debit from your bank account.
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FAQs on SIP in India
What is the minimum SIP amount?
You can start SIP with just ₹100 or ₹500 per month depending on the chosen mutual fund.
Can I pause or stop my SIP?
Absolutely. Most SIPs can be paused or stopped online; restarting is also simple.
Are SIP returns guaranteed?
No. Returns depend on mutual fund performance and market movement, but SIPs help reduce timing risks.
How is SIP taxed?
Equity mutual fund SIPs: LTCG above ₹1.25 lakh/year taxed at 12.5% (after one year). Debt SIPs: taxed as per your income slab.
How is SIP different from lump-sum investment?
SIP spreads your investment, letting you buy units across highs and lows. Lump sum puts your entire money in at once and is exposed to immediate market conditions.
Can NRIs invest in SIP?
Yes, NRIs can invest in SIPs using their NRE/NRO accounts, following RBI guidelines.