Systematic Investment Plan (SIP)

How a SIP works

You choose a scheme, an amount and a date. On each SIP date the amount is debited from your bank account through a mandate (NACH / UPI AutoPay) and units are allotted at that day's applicable NAV.

Because the amount is fixed and the NAV changes, you buy more units when prices are lower and fewer when they are higher. Over time this averages out your purchase cost - a principle known as rupee-cost averaging.

Why investors use SIPs

• Discipline - investing becomes a habit, like a recurring deposit
• No need to time the market
• Small starting amounts - many schemes accept SIPs from ₹100-₹500
• Compounding - returns earned are reinvested and can grow over long periods

Points to keep in mind

• Rupee-cost averaging does not guarantee a profit or protect against losses in a falling market
• Keep enough balance in your bank account on the SIP date - repeated bounces can lead to the SIP being cancelled
• A SIP in an equity scheme is best suited to long time horizons
• You can pause, modify or stop a SIP by giving notice to the AMC as per its process

What is the minimum SIP amount?

It varies by scheme; many schemes accept monthly SIPs from ₹100 to ₹500. The exact minimum is stated in the scheme's SID / KIM.

Can I change my SIP date or amount?

Yes. You can usually cancel the existing SIP and register a new one, or use the AMC's modify facility where available.

What happens if I miss a SIP instalment?

The instalment is not invested that month. AMCs may cancel the SIP after a set number of consecutive failed debits, and your bank may charge a bounce fee.