SIP – Systematic Investment Plan
What is a SIP?
A SIP (Systematic Investment Plan) is a fixed amount invested regularly (e.g., monthly) into a mutual fund or ETF. You set it up once, and the money is automatically deducted from your bank account and invested.
Why SIPs are powerful in India
- Fits monthly salary cycle – Most Indians get paid monthly, making SIPs a natural fit.
- Reduces stress of timing the market – You invest consistently regardless of market conditions.
- Averages out cost – You buy more units when prices are low and fewer when prices are high (rupee cost averaging).
- Builds discipline – Automatic investing creates a long-term habit without emotional decisions.
SIP vs Lump Sum
Lump Sum: Works well when valuations are attractive and you have a large amount available. Can be risky if you invest at market peaks.
SIP: Safer for emotions and discipline. Most beginners benefit from SIPs because they remove the pressure of "timing" the market.
How to use SIPs wisely
- Link SIPs to goals – E.g., child's education, retirement, house down payment.
- Increase SIP amount as income grows – When you get a raise, increase your SIP proportionally.
- Avoid stopping SIP during market crashes – Those are actually good buying periods for the long run. Stay disciplined.
The SIP calculator screenshot is the exact Blanket tool users can open under Tools → SIP Calculator, reinforcing the rupee-cost averaging workflow explained above.