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Market-linked investments

Systematic Investment Plan (SIP)

Invest a fixed amount on a fixed date, automatically, and let time and compounding do the heavy lifting.

Read the guide SIP Calculator
What it is
An investment method for mutual funds
Minimum
Often ₹100 to ₹500 a month
Frequency
Daily, weekly, monthly or quarterly
Flexibility
Pause, top up, step up or stop at any time
Risk level: Moderate

A SIP is a way of investing, not a product. Its risk is the risk of the fund you invest in.

What is it?

A Systematic Investment Plan lets you invest a fixed amount in a mutual fund at regular intervals, usually monthly, through an auto-debit mandate from your bank. Each instalment buys units at that day's NAV.

Because the amount is fixed, you buy more units when prices are low and fewer when they are high. Over time this evens out your average purchase cost, known as rupee cost averaging. It also removes the pressure of trying to time the market.

How it works

  1. You choose a fund, an amount, a date and a duration (or "until cancelled").
  2. You set up a one-time bank mandate (NACH, e-mandate or UPI AutoPay).
  3. Each instalment is invested on the chosen date and units are added to your folio.
  4. You can step up the amount every year, pause for a few months, or stop without any penalty from the SIP itself.

Types

Regular SIPThe same amount every month for as long as you choose.
Step-up (top-up) SIPThe amount rises by a set percentage or amount each year, usually in line with income growth.
Flexible SIPLets you change the amount for individual instalments.
Systematic Transfer Plan (STP)Moves a lump sum gradually from a debt or liquid fund into an equity fund.
Systematic Withdrawal Plan (SWP)The reverse of a SIP: a fixed amount is redeemed every month to provide regular income.

Benefits and risks

Benefits

  • Builds a disciplined savings habit with small amounts.
  • Averages out market ups and downs over time.
  • No need to time the market.
  • Step-ups let your investing grow with your income.

Risks and drawbacks

  • Does not guarantee profits or protect against losses in a falling market.
  • Stopping SIPs during market falls defeats the averaging benefit.
  • Missed instalments due to insufficient bank balance can attract bank charges.

How it is taxed

  • Each SIP instalment is treated as a separate purchase. When you redeem, the units bought first are treated as sold first, and each lot's holding period is counted from its own purchase date.
  • The fund's tax rules then apply: see Mutual Funds for equity and debt fund taxation.
  • In an ELSS SIP, each instalment has its own 3-year lock-in.
Rules for FY 2026-27, reviewed November 2026. Surcharge and cess apply on top. Tax rules change, so confirm before you file. Our tax team can help with your return.

Who it may suit

Salaried and self-employed investors with regular income who want to invest steadily for long-term goals such as retirement, a child's education or buying a home.

Getting started

  1. Work out the monthly amount your goal needs using the goal planner or SIP calculator.
  2. Choose a fund whose category fits the goal's time horizon.
  3. Register a bank mandate and pick a SIP date a few days after your salary or income arrives.
  4. Review once a year and step up the amount when your income rises.

Common questions

Which SIP date is best?

Over long periods the date makes little difference to returns. Choose a date soon after your income arrives so the instalment never bounces.

Should I stop my SIP when markets fall?

Falls are when a SIP buys more units for the same money. Stopping usually locks in the lower average and misses the recovery. Review the fund, not the market level.

Is a SIP better than a lump sum?

With money you already have, a lump sum is invested for longer. A SIP suits money you earn over time and reduces the risk of investing everything at a market peak. Many people combine both.

This guide is general education, not investment, tax or legal advice, and does not recommend any product. Investments in securities markets are subject to market risks; read all related documents carefully before investing.