How To Invest In SIP (Systematic Investment Plan)?

One of the easiest ways to develop a savings habit is by investing through SIPs. Apart from being quick and easy, it also does not burn a whole in your pocket or disturb monthly budget. Most investment vehicles like mutual funds^^ or Unit-Linked Insurance Plan (ULIP Plan) offer setting up SIPs or Systematic Investment Plans. Let us explore multiple aspects of investing through SIPs in detail below.

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Returns
Fund Name 3 Years 5 Years 10 Years
Top 200 Fund Tata AIA 25.82% 27.95%
21.32%
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Virtue II PNB Metlife 24.89% 23.55%
19.17%
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Pure Equity Birla Sun Life 22.47% 20.42%
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Growth Opportunities Plus Fund Bharti AXA 18.78% 19.52%
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Pure Stock Fund Bajaj Allianz 19.94% 18.25%
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Equity Top 250 Fund Edelwiess Tokio 16.83% 16.46%
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Blue Chip Fund HDFC Standard 14.89% 15.7%
15.23%
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Growth Super Fund Max Life 15.01% 16.06%
14.68%
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Equity Fund SBI 15.52% 15.59%
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Multi Cap Growth Fund ICICI Prudential 16.24% 14.56%
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Updated as on January 2024

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  Returns
Fund Name 3 Years 5 Years 10 Years
Large Cap Fund Nippon India 29.45% 15.33%
17.04%
Bluechip Fund SBI 22.34% 14.79%
15.74%
Cap Fund Edelweiss Large 20.14% 14.01%
14.37%
Frontline Equity Fund Aditya Birla Sun Life 21.57% 13.35%
14.61%
Bluechip Fund ICICI Prudential 24.00% 14.36%
15.43%
Large Cap Fund Mirae Asset 18.65% 13.49%
16.93%
Bluechip Equity Fund Canara Robeco 18.57% 15.24%
14.42%
Bluechip Growth Kotak 19.78% 14.55%
14.76%
Large Cap Fund Baroda BNP Paribas 19.37% 15.09%
14.67%

Updated as on January 2024

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What is Systematic Investment Plan?

SIP is a way of disciplined investment in investment vehicles like ULIP or mutual fund schemes over a specific tenure. The small amounts of SIP investment accumulated over a certain duration helps you build a large corpus for future needs. 

As you can also opt for auto-debit facility, the SIP amount gets automatically deducted from your bank account. Further, it helps you develop a savings habit in the long run.

While SIPs are convenient, they are not the only mode of investment in mutual funds or similar other investment vehicles. Lump sum investment is another popular way. 

In lump sum, a large portion of money is invested in one go into the chosen investment vehicle. For instance, investing Rs 1 lakh in a mutual fund scheme of 5-years. 

Step-by-Step Guide to How to Invest in SIP in India:

Here, let us give you a detailed and step-by-step guide on how to invest in SIP.

Step 1- Understand your Risk Appetite and the Objective of Investment

You should first understand your risk tolerance before investing. In most cases, higher the age and financial obligations lower the risk tolerance. However, if you want a higher return on investment, you will have to increase your risk appetite. 

  • After you have assessed your risk tolerance, it is now important to understand why you want to invest. 

  • Investments help us meet our financial goals. You can have multiple goals like your kid’s higher education and marriage, buying a new car, vacation, retirement etc. or you can have a particular goal for which you want to grow your wealth. 

  • So, it is imperative to know the objective for investment, as it will help you get the right portfolio mix of equities and debts.

Step 2- Choose a Mutual Fund for your Investment

You can choose from various ULIP plan funds and mutual fund schemes available in the market. However, the selection of funds should be based on your risk profile as well as your personal financial goals that you want to achieve through SIP investments. 

  • The fund’s performance in the past few years should also be taken into account while choosing the funds. 

  • Once you have chosen the mutual fund company, you will have to go through the following steps:

    • Fill up the application form

    • Submit a cheque of monthly SIP amount (for offline mode) or fill up ECS form (for online mode)

    • Provide a cancelled cheque

    • Provide your Residential Proof

    • KYC form

Step 3- Select the Date of SIP

As under Systematic Investment Plan (SIP), your money gets auto-debited from your bank account, it is necessary to choose a particular date when it is convenient for you to pay. However, you can choose multiple dates for SIP instalment per month. 

Most Mutual fund companies offer the following dates for the investors to choose from- 1, 5, 10, 15, 20, and 28th of every month.

Step 4- Decide on the Duration of SIP

Investment in mutual fund through systematic investment plan (SIP) is the best and the most convenient way to fulfil your financial goals. 

One can calculate the maturity amount required for meeting your future financial goals using the SIP calculator.

Step 5- Decide Whether you want to Invest Offline or Online

Both offline and online modes are available under Systematic Investment Plan (SIP). 

  • However, the best part if one invest in SIP online is that it allows auto-debit of money into your ULIP plan or mutual funds. 

  • So, if you learn how to invest in SIP online, there is no need for manual money transfer to your SIP account.

Step 6- Stay Invested till the End of your Investment Period

Systematic Investment Plans (SIPs) are the best way to create wealth through long-term investments. You don’t need to check daily prices of ULIP Funds performance or Mutual funds growth market every day. So, stay free of worries till the end of your investment period.

There are a number of benefits of investing through SIP discussed in this article. So, if you are thinking of starting a long-term financial planning in order to fulfil your future financial goals, SIP investment is the best way to start with.

Step 7- Diversify your SIP Investments

Instead of investing in too many ULIP plans and mutual fund schemes, it is advisable to invest only in three to four funds that have been consistently performing well over the past years.  

  • In the beginning, it is important to build a well-diversified as well as a balanced portfolio. This will ensure a good start for your investment. 

  • Investing in a combination of large-cap-oriented, small- and mid-cap funds, multi-cap funds can be a good call.

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How to invest in SIP online in three simple steps:

Now that you know about how to invest in SIP in India, let us discuss how to start SIP investment. Below are the three simple steps to start and SIP online:

  1. Keep the Necessary Documents Handy

    In order to start an SIP, you simply need a handful of documents:

    • PAN card

    • Address Proof

    • Cheque book

    • Passport size Photograph

    • Address proof (copy of your Driving License, Utility Bill, or Bank Statement)

    You can open SIP account online once you have these documents.

  2. Get your KYC done

    To invest in SIP online for investing in Mutual Funds and ULIP Funds, you must provide certain details:

    • Name

    • Date of Birth

    • Address

    • Mobile Number

    • KYC verification (log onto the website of the fund house or ULIP plan’s insurance company of your choice🡪 provide the required details, such as a soft copy of your PAN Card and Address Proof)

    This is just the one-time thing you need to do and you are eligible to invest in multiple funds.

  3. Start your SIP Online

    Once your KYC is successfully done for SIP investment in India, you need to do the following:

    • Visit the website of the fund house you wish to invest in

    • Look for ‘Register’ or ‘New Investor’ link. 

    • Fill in the basic details when prompted

    • Create your Username and Password for online transactions.

Lump Sum Vs SIP: Which Plan Is Better?

sip-vs-lumpsum sip-vs-lumpsum

Investing lump sum in equity securities is less beneficial as a large portion of your income is locked in market-linked assets. Since the markets fluctuate daily, you may risk losing large portions of money if the investment plan does not align with your future goals.

In an equity-linked ULIP plan or Mutual Fund scheme, it may happen that the particular fund in which you have invested large chunk of money starts under-performing continuously for two to three years. 

If you have financial liabilities like personal loans or home loans etc. to repay, that may not be very likable since a high inflation period like this may hamper your financial position.

Tips to invest in SIP?

How to invest in SIP in India is a big question when an individual starts investing. However, along with how to start SIP investment, it is also important to know how to invest in a SIP.

The following points or tips are advised by the investment experts that one should consider to start a SIP:

  • Invest Atleast 50% into Equities: Investing half of the amount in equity-linked SIPs with highest 5-year returns helps ensure a robust return on investment. 

  • Be Patient and Observe the Market Trends: As the capital market investments are always associated with some risk or volatility, investments made in a hurry may affect your returns. 

  • Keep Invested for Longer Tenure: As market irregularities are corrected over a period, long term investments tend to fetch higher returns. 

  • Avoid Frequent Switching between Funds: Frequent switching between the assets of your ULIP plan or mutual funds whenever there is a dip in the market only increases the expenses. Moreover, it also reduces the overall return that your fund or plan is expected to earn.

  • Do not Exit from SIP Plan in Between: Exiting midway generally leads to missing out on good market days that could have fetched a higher return. For doing so, it is always advisable to understand how to invest in SIPs in India in detail or take professional help.

  • Longer the Investment Period, Higher the Returns: As the capital market is mostly volatile, it is quite natural that your fund will experience both profit and loss. However, it evens out in the longer run and returns are higher. 

  • Invest in a Balanced Portfolio: Investing in a balanced portfolio through systematic Investment Plans (SIPs) helps reduce losses when the market is down. 

People Also Read: SWP Calculator

How to Set SIP Goals?

Before we talk about how to invest in SIP in India, let us talk about SIP goals in the following list: 

  • Risk Profiling: The goal of SIP investments is to ensure that your portfolio gets a risk profile as per your needs and risk taking appetite.

  • Market-Linked Assets Diversification: A good diversification across asset classes is crucial if you really want to earn the maximum return from your investments.  

Diversification of assets become easier with SIP as it is a simple as well as a flexible investment plan. 

  • Link SIP Plan to Bank Account: Generally, the money is auto-debited from your bank account and is invested directly into your SIP plans. This allocates your fund portfolio with a certain number of units depending on the market value of your assets (Net Asset Value or NAV) for the day.

SIP should be in conjunction with your bank. If it is not, you need to contact the relationship manager of your bank and he will get you set up.

  • Do Thorough Research: Ensure that the mutual funds you select meet the following criteria:

    • The total corpus, or the asset size, of the mutual fund is large. Rs. 500 Crore is a good reference point. 

    • Of course, there are outstanding mutual funds that do not have Rs. 500 Crore in assets, but if you are a newcomer, this a good general rule of thumb.

    • The mutual fund has been in duration for at least 5 years (the longer, the better).

    • Always choose a reputed fund house. There are several fund families or fund houses in India such as Reliance, HDFC, SBI, Birla Sun Life etc. 

Therefore, if you are able to recognize any of them, you are probably good to go.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

How SIP Works?

We will discuss how to invest in SIP in India. But first let’s get to know how to start SIP investment and how SIP works:

  • Systematic Investing: An SIP works in a systematic way allowing you to invest on a monthly basis. 

An Example of How SIP Works:
Let us say your monthly salary is Rs. 60,000/- and you set aside 10% of your monthly salary towards an SIP. 
  • A detailed investigation on the largest mutual funds and best ULIP plans in India will help you see how a number of funds have consistently outperformed the overall market over time. 
  • Take for example SBI blue Chip Fund. It is one of the largest mutual funds in India, which was launched in June 2006. The fund has over Rs. 1000 Cr. in assets and this was achieved within a period of 10 years.
  • If you have started investing in this plan through SIP from June 2006, Rs. 6000 will be automatically taken out from your fund every month. The money will be invested into the fund on a monthly basis. 
  • SIPs that take care of the two Basic Tenets of Investments, i.e. Consistency and Discipline:

    • Consistency: As Systematic Investment Plan (SIP) automatically takes out Rs. 6000/- every month, the consistency of investment is maintained. 

    • Discipline: This also ensures a disciplined investment as the insurance company or the mutual fund house invests the money on your behalf.

  • Compounding Power of Money: The major advantage of Systematic Investment Plan (SIP) is the power of compound interest. Rs. 6000/- that you keep aside every month, accumulates over the years to turn into a huge amount of money. 

Illustration of Power of Compounding of Money:
Investment tenure= June 2006 to March 2015, 
No. of times Rs. 6000 auto-debited= 106. 
So,
Total Amount invested in SIP plan= Rs. 6000 x 106
                                                            = Rs. 636,000/-
As per the Annualized Compounded Return of the ULIP plan and Mutual fund, for the amount you invested in the Capital market,
Your Expected Overall Returns= 17%
Therefore, your investment gets doubled in value. 
Better yet, 
  • Sensex that gauges the performance of the market goes up in value by 188% during those 104 months of investment. 
  • However, this mutual fund goes up in value by more than 300%. 
  • In general, a good mutual fund always and consistently outperforms the market.
  • The best way to get advantage of SIP investment is to just get started. 

  • If you are not an expert in market timing, no need to worry because, SIP takes care all of your investment needs. 

  • One can also open an SIP account online and learn how to start investing through little research on mutual fund houses and the top insurance companies. 

Here you might have got a slight idea about how to invest in SIP in India. Now, let us learn where to invest from the next section.

Where to Invest in SIP?

How to invest money in SIP is an important question. However, before making SIP investment you must know where to invest your hard-earned money to get better returns. 

So, if you are looking for the best SIP plans in India, check the past few years’ performances of the funds managed by both the insurance companies and mutual fund houses. Based on our research we have shortlisted five best SIP Plans in India. These plans will give you an idea to make a well-informed decision before buying an SIP plan. 

Let us have a look at the top 20 SIP Investment Plans 2023 in India in the table below:

SIP Scheme 3-year Returns 5-year Returns
Equity Mutual Funds
Quant Tax Plan 36.94% 21.3%
Quant Active Fund 33.51% 20.10%
Quant Mid Cap Fund 34.4% 20.03%
PGIM India Midcap Opportunities Fund 31.35% 18.65%
Parag Parikh Flexi Cap Fund 21.88% 17.17%
Tax Saving Mutual Funds
Canara Robeco Equity Tax Saver Fund 18.13% 15.77%
Kotak Tax Saver Fund 17.17% 14.12%
PGIM India ELSS Tax Saver Fund 20.17% 13.70%
Hybrid Mutual Funds
Quant Multi Asset Fund  30.24% 21.02%
Quant Absolute Fund 28.96% 18.38%
ICICI Prudential Multi Asset Fund 21.65% 16.65%
Kotak Multi Asset Allocator FoF-Dynamic Fund 19.98% 15.70% 
HDFC Balanced Advantage Fund 18.82% 12.20%
Debt Mutual Fund
ABSL Medium Term Fund 13.39% 8.58%
UTI Bond Fund   9.76% 4.36%
ICICI Prudential Short Term Fund 6.7% 7.76%
ULIP Plans
PNB MetLife- Met Smart One- Virtue II 19.50% 13.50%
PNB MetLife- Met Smart Platinum- Virtue II 19.50% 13.50%
Future Pension Advantage Plan- Future Pension Active 19.10% 13.20%
Bharti AXA Life- Future Secure Pension- Growth Opportunities Pension Plus 17.20% 12.90%
See More Plans

Disclaimer: Policy bazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer. Tax benefit is subject to changes in tax laws. *Standard T&C Apply

Based on the market performance and the return rate of last three to five years, we have sorted out the schemes above.

Among the above listed top 20 SIP schemes, let us discuss the best 5 SIP investment plans below:

  1. Quant Tax Plan

    Quant Mutual Fund offers Quant Tax Plan, the highest returns tax saver ELSS mutual fund scheme. The fund was launched on January 01, 2013 and today it holds the Assets Under Management (AUM) of Rs. 2692 crores. 

    You can understand this as best SIP plan from its Net Asset Value of Rs. 248.09 per stock. This fund ranks top with excellent fund performance quality and controlled high returns to its investors. The fund offers annualised returns of 20.04% while doubling the invested amount in 3 years.

  2. Canara Robeco Equity Tax Saver Fund

    This tax saving ELSS scheme offered by Canara Robeco Mutual Fund house was launched in January 01, 2013. As on 31 December 2022, the AUM under this medium-sized fund is worth Rs. 4576. The fund offers annualised returns of 15.16% and an expense ratio of 0.61% with Net Asset Value of Rs. 125.55. 

    As per the trends, this fund doubled the investor’s money in every 3 years. Majority of its investments are in financial, technology, automobile, energy, and capital goods sectors.

  3. Quant Multi Asset Fund

    Quant Mutual Fund launched the Quant Multi Asset Fund Plan on 1st January 2013 and today the AUM under it is of Rs. 604 crores and expense ratio of 0.56%. The investment offers annualised returns of 13.68% with major investments in financial, energy, metal & mining, and services sectors. 

    It allocates 63.40% of its fund in equity assets and 8.40% in debt securities with an objective to generate long-term capital appreciation. However, there is no guarantee of returns whatsoever.

  4. Aditya Birla Sun Life Medium Term Direct Plan (Growth)

    Aditya Birla Sun Life Mutual Fund offers Medium Term Direct Growth Plan, which is the best debt securities based SIP plan category. Launched on 1st January 2013, the fund holds the AUM worth Rs. 1643 crores and an expense ratio 0.81%. The Net Asset Value offered by the fund is Rs. 33.84 with annualised returns of 9.54% as on 14th February 2023.

    The investment objective could be to generate medium-term capital income or appreciation by pre-dominantly letting money to various medium risk category borrowers. One cannot expect guaranteed returns in the future, as the risk of default is higher in this fund.

  5. PNB MetLife- Met Smart One- Virtue II

    PNB MetLife India Insurance offers the best ULIP plan with top performing fund of Net Asset Value of Rs. 29.31 as on 8th April 2019. The ULIP fund offers 3-year annualised returns of 7.40% and 5-year annualised returns of 8.30%.

    These funds come with a lock-in period of 3 years and tax benefits on maturity amount redemption after the completion of 3 years. It must also be noted that the investors are provided tax exemption of up to Rs. 1.5 lakhs every year on the SIP premium amounts invested every year in this plan.

People Also Read: Systematic Withdrawal Plan (SWP)

Features of SIP Investment

Systematic Investment Plan (SIP) offers many features to investors, a few of them are mentioned below: 

  • SIP allows you to monitor your fund’s performance from time to time. 

  • SIP investment plans will allow you to invest in a ULIP plan or mutual fund in periodic instalments. 

  • You get to decide your level of savings in SIPs if you have already set aside a significant amount of money for your insurance premiums and future emergencies. 

  • SIP calculator online tool can be used to analyse the SIP returns. 

  • Calculating SIP returns can help you decide upon how to invest in SIP in India.

However, you must be careful with fund allocation as it is an important step in SIP investment. Always be choosy in the selection of funds and make sure that you do not have an excess number of equity mutual funds.

Wrapping It Up

I am sure that you must be finding it easy to learn how to invest in SIP online and how to open SIP account. However, that is just the 2% part of SIP investment. To gain large corpus from the highest returns SIP plans, one has to learn where to buy an SIP and what are the best mutual funds and ULIP plans that one can invest in.

FAQ's

  • Which is the best SIP for beginners?

    To decide the best SIP for beginners, the investment experts advise to invest in the mutual funds or ULIP plan funds with high 3 year or 5 year returns. The fund value with above Rs. 500 crores assets under management should also be checked to avoid risky investments.
    Following SIP plans can be the best SIP for beginners:
    • Quant Active Growth Fund
    • Quant Tax Plan
    • Kotak Tax Saver Fund
    • Mirae Asset Tax Saver Fund
    • Aditya Birla Sun Life Medium Term Fund
  • Can I invest Rs.100 daily in SIP?

    Yes, many fund houses offer mutual funds and ULIP funds with minimum SIP amount of Rs. 100. But in such schemes, long-term capital investment will be crucial to see any substantial growth in the invested amount.
  • Is SIP a good investment?

    Yes, SIP are a good investment method for investors who want to do some disciplined investing regularly. 
    • The benefits of long-term SIP investment plans offer high returns despite any market fluctuations generally. 
    • It also eases out any burden on the investor’s pocket, as very small amounts are paid periodically in the best SIP plans.
    • It creates a disciplined investment environment without any erratic investment decisions in some months.
    • It relieves the investors from the need to regularly check the market trends, as fund managers will do that task for you.
  • Can I withdraw SIP anytime?

    Yes, one can withdraw their SIP anytime if it is free from any lock-in period, which usually comes with ELSS schemes. In case of any emergency financial needs or if the SIP returns are not up to the investor’s expectations, they can definitely withdraw from their SIP plan.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^10(10D) Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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