SIP - Systematic Investment Plan in India

Best SIP Investment Plans in 2025

Discover the best investment options in mutual funds and insurance companies to make a regular SIP investment:

What is a SIP Investment?

SIP or a Systematic Investment Plan, is a simple and convenient way to grow your wealth by investing regularly in mutual funds. It lets you invest small amounts at fixed intervals, helping you build a habit of saving. You buy units of the mutual fund at different prices, which helps reduce the risk of losing money and grows your money with the power of compounding. 

A SIP investment is a smart and easy way to invest for long-term goals like retirement or children’s education. SIPs are still popular today because they are affordable, simple to start, and can help grow your wealth over the years.

How Does a SIP Investment Plan Work?

You can learn the workings of a systematic investment plan from the following to make better decisions: 

• Step 1: Select the best SIP plan that aligns with your financial goals and risk tolerance by comparing the past performance, fund objectives and other features of a SIP investment plan. 

• Step 2: Decide how much to invest and whether to contribute monthly, quarterly, or yearly to the chosen SIP investment plan.

NOTE: The returns from your SIP will depend on the performance of your chosen fund. However, in the long term, SIP investment plans have been shown to be an excellent way to grow your wealth.

Illustration of Benefits of SIP Investment Plan: 

If you invest ₹5,000 monthly for a period of 10 years in different best investment options such as SIP Plan, Recurring Deposit (RD), and Public Provident Fund (PPF). Let us assume the expected annual return from SIP, RD, and PPF is as follows as per their average performance:

• Systematic Investment Plan (SIP): 15%

• Recurring Deposit (RD): 6%

• Public Provident Fund (PPF): 7.1%

1. Maturity Value Calculation:

   Maturity value calculation for the SIP Plan using the SIP Calculator:

   • Expected Annual Return: 15%

   • Monthly Investment: ₹5,000

   • Time Period: 10 years

   • Total Amount Invested: ₹5,000 × 10 years × 12 months = ₹6,00,000

   • Maturity Amount: ₹13,15,000 (approximately)

   • Wealth Gained: ₹13,15,000 - ₹6,00,000 = ₹7,15,000 (approximately)

   Maturity value calculation for Recurring Deposit Scheme using the RD Calculator:

   • Expected Annual Return: 6%

   • Monthly Investment: ₹5,000

   • Time Period: 10 years

   • Total Amount Invested: ₹5,000 × 10 years × 12 months = ₹6,00,000

   • Maturity Amount: ₹8,16,000 (approximately)

   • Wealth Gained: ₹8,16,000 - ₹6,00,000 = ₹2,16,000 (approximately)

   Maturity value calculation for Public Provident Fund using the PPF Calculator:

   • Expected Annual Return: 7%

   • Monthly Investment: ₹5,000

   • Time Period: 10 years

   • Total Amount Invested: ₹5,000 × 10 years × 12 months = ₹6,00,000

   • Maturity Amount: ₹8,92,049 (approximately)

   • Wealth Gained: ₹8,16,000 - ₹6,00,000 = ₹2,92,049 (approximately)

2. Comparison of Maturity Amount under SIP, PPF, and RD:

   Investment Option	Expected Annual Return	Time Period	Monthly Investment	Total Amount Invested	Future Value After 10 Years	Interest Earned
   Systematic Investment Plan (SIP)	15%	10 years	₹5,000	₹6,00,000	₹13,15,000	₹7,15,000
   Recurring Deposit (RD)	6%	10 years	₹5,000	₹6,00,000	₹8,16,000	₹2,16,000
   Public Provident Fund (PPF)	7.1%	10 years	₹5,000	₹6,00,000	₹8,92,049	₹2,92,049

What are the Key Features of SIP Investment Plans?

The key features of the best SIP investment plans in India are listed in the table below:

• Disciplined Investment: A SIP investment encourages regular, automatic contributions to build wealth over time.

• Portfolio Diversification: A Systematic Investment Plan helps to reduce the overall risk of investment and maximise long-term returns by allowing you to invest in a mix of the following assets: 

  • Equity Assets

  • Debt Instruments

  • Money Market Instruments (MMI)

  • Repurchase Agreement (Repo)

Types of SIP Investment in India

The following table lists the significant types of SIP Plans in India based on the way of investing in a SIP investment plan:

1. Regular (Fixed) SIP

   • Investors contribute a fixed amount at regular intervals (monthly, quarterly, etc.).

   • Ensures disciplined investing and is ideal for those seeking consistency and predictability in their investments.

2. Top-up (Step-up) SIP

   • Allows investors to increase their SIP amount periodically, typically in line with salary increases or increased savings capacity.

   • Helps accelerate wealth accumulation as income grows.

3. Flexible SIP

   • Offers the flexibility to increase, decrease, or pause contributions based on changing financial circumstances.

   • Useful for those with irregular income streams, such as freelancers or business owners.

4. Trigger SIP

   • Investments are made or modified based on predefined triggers, such as market indices, NAV levels, or specific dates.

   • Suitable for seasoned investors who want to capitalize on market movements.

   

5. Perpetual SIP

   • No fixed end date; investments continue until the investor chooses to stop.

   • Ideal for long-term wealth creation without the need to renew or extend the plan.

6. Multi-SIP (Multiple SIP)

   • Enables investment in multiple mutual fund schemes through a single SIP instruction.

   • Simplifies diversification and portfolio management.

7. SIP with Insurance

   • Combines mutual fund investing with a life insurance cover.

   • Provides financial protection to the investor’s nominee in case of untimely death during the SIP tenure.

8. Goal-Based SIP

   • Designed to help investors achieve specific financial goals, such as education, marriage, or home purchase.

   • Encourages disciplined savings towards defined milestones.

What are the Documents Required for SIP Investment?

You need to submit the following documents to complete your SIP investment process:

• KYC Documents (Any One): PAN (Permanent Account Number) card, Passport, Aadhar Card.

• Bank Account Details: Account Number, Branch Name, IFSC code.

• Address Proof (Any One): Valid Passport, Driving License, Voter ID Card, Utility Bills (electricity, gas, water, or telephone bills).

Taxation of SIP Investment

The taxation of the SIP investment plan as per the Income Tax Act is as follows: 

1. Tax Treatment by Fund Type

   Equity Funds (≥65% equity exposure)

   • Short-Term Capital Gains (STCG): Gains from units held ≤12 months are taxed at 15%.

   • Long-Term Capital Gains (LTCG): Gains from units held >12 months are tax-exempt up to ₹1 lakh/year. Excess gains are taxed at 10% without indexation.

   Debt Funds (<35% equity exposure)

   • Short-Term Gains (≤36 months): Added to taxable income and taxed as per the investor’s income slab.

   • Long-Term Gains (>36 months): Also taxed as per income slab (no indexation benefit after 2023 rule changes).

   Hybrid Funds

   • Equity-Oriented (35–65% equity): Taxed like equity funds.

   • Debt-Oriented (<35% equity): Taxed like debt funds.

   Read more

2. SIP-Specific Taxation Rules

   • FIFO Method: Redemptions follow the "First In, First Out" principle. Each SIP installment is treated as a separate investment with its own holding period.
     Example: If you redeem after 14 months, the first few installments may qualify for LTCG, while later ones are STCG.

   • LTCG Exemption: Only applicable for equity funds. Gains up to ₹1 lakh/year are tax-free; beyond that, 10% tax applies.

3. Dividend Taxation

   • Dividends are added to the investor’s taxable income and taxed as per their slab rate.

   • TDS: 10% TDS deducted if annual dividends exceed ₹5,000.

4. Tax-Saving SIPs (ELSS)

   • Section 80C Deduction: Investments up to ₹1.5 lakh/year qualify for tax deductions.

   • Lock-in Period: 3 years. Post-lock-in, LTCG rules apply (exempt up to ₹1 lakh/year). 

5. Calculation Example

   • Investment: ₹10,000/month in an equity fund for 2 years (total ₹2.4 lakh).

   • Redemption: After 15 months at ₹3 lakh.

     • First 12 installments: Held >12 months → LTCG of ₹60,000 (exempt under ₹1 lakh).

     • Remaining 3 installments: Held <12 months → STCG of ₹15,000 taxed at 15%.

6. Recent Changes (2025 Budget)

   • Debt funds lost indexation benefits; all gains are now taxed as income.

   • Hybrid funds with 35–65% equity follow equity fund taxation rules

Top 7 Benefits of SIP Investment Plans in 2025

Some of the significant benefits of investing in a SIP plan are as follows:

• Low Minimum Investment: Start a SIP with just Rs. 100, with no upper limit on contributions.

• Compound Growth Benefits: SIP plans leverage compounding for substantial long-term investment growth.

Which is Better: SIP vs Lump Sum Investment?

Let us briefly discuss the comparison between SIP investment and one-time investment from the table below:

SIP vs Other Investment Options

A quick comparison of SIP against other investment options is mentioned in the following table:

Who Should Invest in a SIP Investment Plan?

A Systematic Investment Plan can be a good investment option for a variety of people. Here are some characteristics that make someone a good fit for a SIP:

• First-time Investors

• Young Professionals

• Risk-Averse Individuals

Risk Assessment and Management in SIPs as per Age

Systematic Investment Plans (SIPs) involve investing a fixed amount regularly in mutual funds. The risk level should align with your age, financial goals, and risk-taking ability.

Understanding Risk Assessment in SIPs

• Risk assessment is important for SIPs to align your investments with individual financial goals and risk tolerance.

• You should evaluate your financial objectives, such as buying a home or funding education, and set a timeline for achieving these goals.

Age-Wise Risk Management:

How to Choose the Best SIP Investment for Your Financial Goals?

Before investing in a Systematic Investment Plan in India, the following important aspects should be kept in mind:

• SIP Duration: Consider investing in a SIP for at least 5 years to gauge market performance.

• Fund House Track Record: Evaluate the reputation and past performance of your SIP's fund house to assess their ability to manage market fluctuations effectively.

• Rs. 500 Cr Asset Size Benchmark: For new investors, a fund with Assets Under Management (AUM) of Rs. 500 Cr can serve as a suitable benchmark when selecting the best SIP investment plan.

Types of SIP Investment Returns Calculation?

You can learn how your money grows through a SIP, which involves measuring returns using different methods:

• Absolute Return/ Point-to-Point Method: This method calculates the total profit or loss on your investment which is used to assess the immediate gains of your SIP investment. 

• Annualised Return: Annualised returns expresses your absolute return as an annual percentage, which does not consider compounding effects.

• Compounded Annual Growth Rate (CAGR): CAGR offers a more accurate view by factoring in compounding. It shows the average annual return if your investment had grown steadily over the entire period.

Top 10 SIP Investment Mistakes to Avoid

Some of the common SIP mistakes that you should consider to avoid low returns are as follows:

• Not Setting Clear Goals: Investing without specific financial goals can lead to unfocused efforts. Define what you’re saving for, whether it’s retirement, a home, or education.

• Ignoring Risk Tolerance: Not assessing your risk tolerance can result in choosing inappropriate funds. Understand how much risk you can handle and select SIPs accordingly.

• Investing for Short-Term Gains: SIP investments are designed for long-term investing. Avoid the temptation to chase short-term profits; stay committed to your investment horizon. 

Interactive Tools and Resources for SIP Calculation

The easy-to-use tools like the SIP Calculator, XIRR Calculator, and CAGR Calculator can help you maximize your SIP investments. These tools make it simple to calculate your returns, track growth, and plan for your financial goals, helping you make better investment decisions with confidence.

I know my investment amount I know my goal amount

Monthly SIP Yearly SIP Lumpsum

I want to invest Pro Tip

Financial experts suggest that a person should invest 10-15% of their monthly income for long-term financial growth

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I want to invest for Pro Tip

Financial experts suggest that individuals should ideally invest for a period of 5 to 10 years, or even longer, to maximize the benefits of compounding and navigate market fluctuations effectively

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Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

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Total Wealth ₹22.4 L

View Plans

I want to save

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Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

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Monthly Investment ₹22.4 L

View Plans

Top Funds with High Returns (Past 7 Years)

18.4%

High Growth Fund

17.46%

Top 200 Fund

14.76%

Accelerator Mid-Cap Fund II

14.81%

Opportunities Fund

10.39%

Equity II Fund

13.52%

Accelerator Fund

14.6%

Growth Opportunities Plus Fund

15.6%

Multiplier

11.66%

Equity Top 250 Fund

13.49%

Future Apex Fund

12.61%

Pension Opportunities Fund

14.22%

Frontline Equity Fund

15.14%

Virtue II

11.01%

Pension Dynamic Equity Fund

11.94%

Equity Fund

10.29%

Blue-Chip Equity Fund

1. SIP Calculator

   You can use a SIP calculator to plan your investments systematically. It calculates returns based on your inputs, such as the amount you invest, the duration, and the expected return rate. This tool is easy to use and gives accurate results, helping you make informed financial decisions. Let us learn more about how you can benefit from using SIP calculator:

   If You Know Your Investment Amount: 

   You can easily calculate the growth of your investment over time if you know your investment amount.

   • Monthly Return Calculation: You can enter your monthly investment amount, expected annual return rate, and investment duration in the Policybazaar SIP Calculator. It will show the total amount you will get at the end of the period.

   • Yearly Return Calculation: By entering your yearly investment amount, expected annual return rate, and investment duration your yearly returns and the total amount you will earn.

   • Lump Sum Return Calculation: Enter the one-time amount you plan to invest, expected annual return rate, and duration. The SIP calculator will estimate your returns and show the total amount at the end of the period.

   If You Know Your Goal Amount:

   The SIP calculator can help you estimate how much you need to invest to reach your financial goal.

   • Enter the amount you want to save, the time period for investment, and the expected return rate.

   • The calculator will show the required monthly investment, the total amount you need to invest, and the wealth you will generate.

   Read more

2. XIRR Calculator

   An XIRR Calculator helps you find the exact rate of return on your investment when there are varying amounts and dates of investment. It gives you a more accurate idea of your returns.

   • Enter the investment amounts and their respective dates.

   • The calculator will show you the XIRR, reflecting your true return rate.

3. CAGR Calculator

   A CAGR Calculator helps you calculate the Compound Annual Growth Rate, which shows how much your investment has grown each year on average over a specific period.

   • Enter the initial investment amount, final value and investment period.

   • The calculator will show the CAGR, which is the average annual growth rate.

Conclusion

Systematic Investment Plans (SIPs) are a disciplined and efficient way of investment, allowing you to contribute regularly to market-linked funds. The SIP investment plans help in averaging the cost of your investment and compound your returns over time, making it an ideal investment option for long-term financial goals.