What is SIP?
A Systematic Investment Plan (SIP) is a disciplined approach to investing in mutual funds, where a fixed amount is invested at regular intervals, such as monthly or quarterly. Instead of timing the market or investing a lump sum, investors can participate consistently, regardless of market conditions. This helps reduce the impact of volatility through rupee cost averaging. SIPs also encourage long-term financial planning. It makes investing more manageable and systematic. Investors can start with relatively small amounts and gradually increase contributions as their income grows. Over time, the power of compounding works in favour of the investor, supporting steady wealth creation. With the flexibility to modify, pause, or stop investments, SIP investment plans offer both structure and convenience. As a result, SIP investments are suitable for diverse financial goals and varying risk appetites.
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Benefits of SIP
Systematic Investment Plans offer a structured way to invest in mutual funds. Outlined below are the key benefits and features that make SIPs a preferred investment choice.
Disciplined Savings
Regular investing builds a saving habit and steadily grows your wealth—discipline is key in equities.
Power of Compounding
You earn returns on both your principal and past gains, creating exponential growth—the “t” in compounding matters!
Rupee Cost Averaging
Investing through ups and downs smooths market volatility, so you don’t need to track the market daily.
Flexible Investments
You can start with just €500 and adjust over time to meet goals, beat inflation, and reach targets faster.
Convenient and Hassle-Free
Set up automatic deductions from your bank account, making investing effortless.
Goal-Based Investing
Set up automatic deductions from your bank account, making investing effortless.
Liquidity
SiPs offer the flexibility to redeem your investments anytime, ensuring liquidity.
Transparency
Regular updates and statements keep you informed about your investment performance.
Tax Benefits
Certain SIPs offer tax deductions under Section 80C of the Income Tax Act.
Professional Management
Your funds are managed by expert fund managers, ensuring your investments are in safe hands.
SIP Calculator
SIP calculator estimates the amount you’ll accumulate from monthly investments based on an expected return rate over a set duration
Monthly SIP Investment
5000
500
10000000
Expected Rate of Return
13
2
13
Investment Period
5
1
30
Disclaimer
- This calculator is provided for informational purposes only.
- The results are based on user inputs and should not be considered as investment advice. Users should seek the advice of a qualified financial professional before making any investment decisions.
- The creators of the calculator and its affiliates shall not be held responsible for any financial losses resulting from the use of the calculator.
- Past performance may or may not be sustained in the future and should not be used as a basis for comparison with other investments. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
- SIP is allowed in select open ended schemes. Refer the Scheme SAI, SID, KIM for detailed information.
Power of starting SIP early
*Values are illustrative and based on assumed long-term market return scenarios.
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Parameters
- Monthly SIP Amount
- Start Date
- Total amount Invested
- Number of SIP Instalments
- Value of Investment
- Investment Horizon
- Impact of Delay
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Early Starter
- ₹8000
- 1/4/13
- ₹11.52K
- 144
- ₹34.8L
- 12Y
- -
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Late Starter
- ₹16000
- 1/4/18
- ₹11.52K
- 72
- ₹24.9L
- 6Y
- ₹9.9L lower corpus --bold--
Both investors invested the same total amount, but over different time horizons. The early starter invested for a longer period, allowing compounding to operate over more market cycles. Despite a lower monthly contribution, the early starter accumulated a higher corpus due to the extended investment duration.
Disclaimer: This illustration is for investor awareness and educational purposes only. The figures are indicative and based on assumptions derived from historical market behaviour. Actual investment outcomes may vary depending on market conditions, fund performance, and investment tenure.
Why opt for an SIP to invest in mutual funds?
- Sectoral mutual funds are designed to track the performance of specific industries within the broader equity market. Unlike diversified funds, they concentrate on a single sector, such as banking, technology, healthcare or infrastructure. This is often indicative of how that segment of the economy is evolving. Their returns tend to move in line with sector-specific developments, policy changes and business cycles.
How is SIP different from lumpsum Investment ?
Both SIP and Lumpsum investments are common ways to invest in mutual funds. However, they differ in how capital is deployed, managed, and exposed to market movements.
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Parameters
- Investment approach
- Market timing
- Risk exposure
- Cash flow sustainability
- Investment discipline
- Return potential
- Investor profile
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SIP
- Fixed amount invested at regular intervals
- Reduces dependency on market timing by spreading investments across cycles
- Gradual exposure helps average purchase cost over time
- Aligns well with regular income and monthly budgeting
- Automated and systematic, encouraging consistent investing
- Suitable for long-term, steady investing; returns vary with market conditions
- Suitable for investors seeking gradual market participation
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Lumpsum
- Entire amount invested at one time
- Highly dependent on market conditions at the time of investment
- Full exposure to market volatility from day one
- Requires surplus funds to be available upfront
- Relies on investor initiative and timing decisions
- May benefit more in consistently rising markets due to early capital deployment
- Suitable for investors with lump sum capital and higher timing confidence
Example: Investing ₹6 lakh as a lump sum depends heavily on market timing. Investing the same amount through a monthly SIP of ₹50,000 spreads investments across multiple market entry points over a year.
Disclaimer: This illustration is for investor awareness and educational purposes only. The figures are indicative and based on assumptions derived from historical market behaviour. Actual investment outcomes may vary depending on market conditions, fund performance, and investment tenure.
Types of SIP
SIP investment plans are available in different formats to suit varying investment needs and cash-flow preferences. Common types include:
Regular SIP
A fixed amount is invested at regular intervals, usually monthly or quarterly.
Step-Up SIP
The SIP investment amount increases periodically, often annually, in line with income growth.
Perpetual SIP
Operates without a predetermined tenure and remains in force until discontinued by the investor. Appropriate for long-term investing.
When to Invest in SIP?
Knowing when to invest in SIPs is an important part of effective financial planning. Here’s what you need to know
Financial Goals and Time Horizon
SIPs are commonly used for long-term objectives such as retirement planning, children’s education, or gradual wealth accumulation. Starting early provides a longer investment horizon, allowing compounding to work more effectively. That said, SIPs can also be started later, provided the goal timeline and expected returns are realistic
Regular Income and Budgeted Investing
SIP investments may be appropriate for investors with steady income who prefer investing smaller amounts at regular intervals instead of making a large one-time commitment. Since investments are spread across different market levels, SIPs help reduce dependence on market timing.
Market Conditions and SIP Discipline
SIPs can be continued across different market conditions, including periods of volatility. During market corrections, lower Net Asset Values (NAVs) may result in higher unit allocation. However, SIP decisions should not be driven merely by short-term market movements
The SIP Resolution
While investing in a SIP, it’s always better to keep a few things in mind and practice them without exceptions. At MOAMC, we call them the SIP Resolutions.
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- Increase Your Investment Amount Regularly
- As your income grows, consider increasing the amount you invest in your SIP. This can accelerate your wealth accumulation over time.
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- Stay Invested for the Long Term
- SIPs work best when you stay invested for the long term. Avoid frequent withdrawals and stay committed to your investment plan.
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- Choose the Right SIP Fund
- Select a SIP fund that aligns with your financial goals, risk tolerance, and investment horizon. Diversifying across different types of funds can also enhance your portfolio's stability.
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- Monitor and Rebalance Your Portfolio
- Regularly review your SIP portfolio to ensure it remains in line with your goals. Rebalance if necessary to maintain the desired asset allocation.
Our Funds
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Frequently Asked Questions
What is an SIP?
- An SIP is a specific amount,invested for a continuous period at regular intervals.
- It is similar to a regular saving scheme like a recurring deposit.
- It allows the investor to buy units as per a pre decided frequency; the investor decides the amount and also the scheme / scrip to invest in.
- Due to the principle of cost averaging, more number of units are bought in a falling market and fewer units in a rising market.
- SIPs allow you to take part in the stock market, without trying to time it, also bringing discipline to your investments.
What are the benefits of an SIP?
- Power of saving:The power of saving underlines the essence of making money work if only invested at an early age. The longer one delays in investing, the greater the financial burden to meet desired goals. Saving a small sum of money regularly at an early age makes money work with significant impact on wealth accumulation explained through the illustration below.Illustration:
AtendofYear5%10%15%20%1Rs.1,050Rs.1,110Rs.1,115Rs.1,1205Rs.1,276Rs.1,611Rs.2,011Rs.2,48810Rs.1,623Rs.2,594Rs.4,046Rs.6,19215Rs.2,079Rs.4,177Rs.8,137Rs.15,40725Rs.3,386Rs.10,835Rs.32,919 Rs.95,396 The above is for illustration purpose only. The SIP amount, tenure of SIP, expected rate of return and unit price are assumed figures for the purpose of explaining the concept of advantages of SIP investments. The actual result may vary from depicted results depending on scheme selected. It should not be construed to be indicative of scheme performance in any manner. Past performance may or may not be sustained in future. - Rupee Cost Averaging:Timing the market is a difficult task. Rupee cost averaging is an automatic market-timing mechanism that eliminates the need to time one`s investments. Here, one need not worry about where share prices or interest are headed as investment of a regular sum is done at regular intervals; with fewer units being bought in a declining market and more units in a rising market. Although SIP does not guarantee profit, it can go a long way in minimizing the effects of investing in volatile markets.
- Convenience:Three simple paperless steps to invest in an SIP:
1.Register for an SIP online
2.Fill the required details
3.Ensure availability of funds
4. Disciplined Investing:It’s the key to investing success. Regular investment makes you disciplined in your savings and also leads to wealth accumulation. Systematic investing is a time-tested discipline that makes it easy to invest automatically. Investing regularly in small amounts can often lead to better results than investing in a lump sum.