What are SIPs (Systematic Investment Plans)?
Systematic Investment Plans (SIPs) are a disciplined method of investing, allowing individuals to invest small, fixed amounts of money regularly in mutual funds or market-linked funds. Instead of making a lump-sum investment, SIPs enable investors to contribute at periodic intervals, such as weekly, monthly, or quarterly.
SIP Calculator
Monthly Investment
₹22.4 L
Top Funds with High Returns (Past 7 Years)
18.4%
High Growth Fund
17.46%
Top 200 Fund
14.57%
Accelerator Mid-Cap Fund II
14.81%
Opportunities Fund
10.58%
Growth Plus Fund
13.35%
Accelerator Fund
14.61%
Growth Opportunities Plus Fund
15.6%
Multiplier
11.48%
Equity Top 250 Fund
13.31%
Future Apex Fund
12.32%
Opportunities Fund
14.24%
Frontline Equity Fund
15.03%
Virtue II
10.88%
Pension Dynamic Equity Fund
11.8%
Equity Fund
10.32%
Blue-Chip Equity Fund
Risk Factors Involved in SIPs
Here's an overview of the key risks involved:
-
Market Risk: SIPs invest in mutual funds or market-linked funds, which are subject to market fluctuations. If the market performs poorly, the value of your investments may decline.
-
Credit Risk: For debt mutual funds or market-linked funds under SIPs, there is a risk of the fund’s underlying instruments defaulting on payments, impacting returns.
-
Interest Rate Risk: Rising or falling interest rates can affect the performance of debt funds within your SIP, potentially reducing your returns.
-
Liquidity Risk: Some funds may have lock-in periods or exit loads, making it harder to withdraw your money when needed. For example: ELSS funds have a lock-in period of 3 years.
-
Inflation Risk: In the long term, if the returns from your SIP are lower than inflation, your purchasing power might decline.
-
Fund Performance Risk: Not all mutual or market-linked funds perform as expected. A poorly managed fund can decrease returns, even if invested via SIP.
-
Overexposure Risk: Investing heavily in a single fund or sector can increase exposure to specific risks, reducing diversification benefits.
- Insurance Companies
- Mutual Funds
|
Returns |
| Fund Name |
5 Years |
7 Years |
10 Years |
| Max Life |
27.23% |
21.07% |
|
| Tata AIA |
30.99% |
21.69% |
|
| Bajaj Allianz |
24.23% |
12.8% |
|
| HDFC Standard |
25.77% |
14.87% |
|
| Canara HSBC Oriental Bank |
17.51% |
10.29% |
|
| Bharti AXA |
23.03% |
15.02% |
|
| Birla Sun Life |
26.67% |
14.18% |
|
| ICICI Prudential |
22.68% |
13.38% |
|
| LIC |
- |
- |
|
| PNB Metlife |
24% |
16.86% |
|
Fund rating powered by
Last updated: May 2025
| |
Returns |
| Fund Name |
3 Years |
5 Years |
10 Years |
| QUANT |
23.92% |
31.48% |
|
| PARAG PARIKH |
20.69% |
26.41% |
|
| EDELWEISS |
22.34% |
24.29% |
|
| KOTAK |
24.64% |
25.01% |
|
| MIRAE ASSET |
19.74% |
24.32% |
|
| PGIM INDIA |
14.75% |
23.39% |
|
| DSP |
18.41% |
22.33% |
|
| CANARA ROBECO |
20.05% |
21.80% |
|
| SUNDARAM |
18.27% |
18.22% |
|
Benefits of Systematic Investment Plans (SIPs)
Below are the benefits of SIPs:
-
Disciplined Investment Habit
SIPs encourage consistent saving by automating regular investments, fostering financial discipline over time.
-
Rupee Cost Averaging
Investing at regular intervals ensures you purchase more units when prices are low and fewer when prices are high, averaging the overall cost and reducing the impact of market volatility.
-
Power of Compounding
Small, regular investments grow significantly over time due to compounding, where your earnings generate further earnings.
-
Affordability
SIPs allow you to start investing with small amounts, such as ₹500 or ₹1,000 per month, making it accessible to investors with limited funds.
-
Flexibility
You can increase, decrease, or stop your SIP at any time without incurring significant penalties, giving you control over your investments.
-
Convenience
Automated payments make SIPs hassle-free, as the investment amount is directly debited from your bank account.
-
Goal-Based Investing
SIPs can be tailored to specific financial goals, such as buying a home, funding education, or retirement planning.
-
No Need for Market Timing
SIPs eliminate the need to time the market, as regular investments balance out price fluctuations over time.
-
Tax Benefits (ELSS Funds)
If you invest in tax-saving mutual funds (ELSS) through SIPs, you can claim deductions under Section 80C of the Income Tax Act.
SIP Calculator
Monthly Investment
₹22.4 L
Top Funds with High Returns (Past 7 Years)
18.4%
High Growth Fund
17.46%
Top 200 Fund
14.57%
Accelerator Mid-Cap Fund II
14.81%
Opportunities Fund
10.58%
Growth Plus Fund
13.35%
Accelerator Fund
14.61%
Growth Opportunities Plus Fund
15.6%
Multiplier
11.48%
Equity Top 250 Fund
13.31%
Future Apex Fund
12.32%
Opportunities Fund
14.24%
Frontline Equity Fund
15.03%
Virtue II
10.88%
Pension Dynamic Equity Fund
11.8%
Equity Fund
10.32%
Blue-Chip Equity Fund
Is SIP Investment Safe?
SIPs can be considered a safe investment because of the below mentioned reasons:
-
Disciplined Approach
SIPs promote regular investments, which can mitigate the risk of impulsive or poorly timed market entries and exits.
-
Rupee Cost Averaging
By investing consistently across market highs and lows, SIPs reduce the impact of market volatility, averaging your purchase cost over time.
-
Diversification
Investing through SIPs in mutual funds provides exposure to a diversified portfolio of stocks, bonds, or other assets, reducing the impact of individual asset underperformance.
-
Long-Term Benefits
SIPs are designed for long-term wealth creation. Historical trends show that staying invested for a longer horizon often yields better returns, despite short-term market fluctuations.
Who Should Consider Investing in SIPs?
Here’s a look at who should consider SIPs and why:
-
New Investors
-
Why: SIPs allow beginners to start small, offering a low-risk entry into the world of investing.
-
Benefits: Ease of investing, no need to time the market, and gradual exposure to market-linked instruments.
-
Salaried Professionals
-
Why: With a steady income, salaried individuals can set aside a fixed amount monthly for SIPs to build wealth over time.
-
Benefits: Encourages disciplined saving and helps achieve financial goals like buying a home, education, or retirement.
-
Individuals with Long-Term Goals
-
Why: SIPs are ideal for long-term financial planning, such as building a retirement corpus, funding children’s education, or planning a dream vacation.
-
Benefits: Leverages the power of compounding and rupee cost averaging over time.
-
Risk-Averse Investors
-
Why: SIPs offer a safer way to navigate market volatility compared to lump-sum investments, reducing the emotional stress of market timing.
-
Benefits: Diversified mutual fund options allow investors to choose funds that align with their risk tolerance.
-
Busy Professionals
-
Why: For individuals with limited time to actively monitor markets, SIPs automate the investment process.
-
Benefits: Hassle-free investing with regular contributions deducted automatically from bank accounts.
-
Parents Planning for Children’s Future
-
Why: SIPs help parents accumulate a significant corpus for education, marriage, or other milestones.
-
Benefits: Long-term compounding ensures steady growth for future needs.
-
Young Professionals
-
Why: Starting early allows young earners to take advantage of longer investment horizons.
-
Benefits: Small, consistent contributions can grow into substantial wealth over decades.
-
People Seeking Tax Benefits
-
Investors Looking for Flexibility
-
Why: SIPs allow for modifications like increasing or stopping contributions, aligning with financial changes.
-
Benefits: Offers control and adaptability without penalties.
Conclusion
While SIPs come with certain risks, such as market volatility, credit risks, and inflationary pressures, these can be mitigated through proper planning and diversification. A long-term approach, combined with regular portfolio reviews and prudent fund selection, can help manage these challenges effectively. By understanding and addressing the risks involved, investors can harness the potential of SIPs to achieve consistent growth and meet their financial objectives, and using an SIP calculator can further assist in evaluating and optimizing investment plans.
FAQs
-
How can I reduce the risks of SIP investments?
You can minimise risks by:
-
Diversifying your investments across fund types.
-
Choosing funds with a strong track record and experienced fund managers.
-
Investing for the long term to overcome market volatility.
-
Regularly reviewing and rebalancing your portfolio.
-
Do SIPs perform poorly during market downturns?
During market downturns, SIPs may experience short-term losses. However, they also provide an opportunity to buy more units at lower prices, which can lead to better long-term returns when the market recovers.
-
Can I stop my SIP if the market crashes?
Yes, you can pause or stop your SIP at any time. However, stopping during a market downturn may prevent you from benefiting when the market recovers.
-
How does rupee cost averaging reduce SIP risks?
Rupee cost averaging allows you to buy more units when prices are low and fewer when prices are high, averaging out the overall investment cost. This strategy reduces the impact of market volatility over time.
-
Should I seek professional advice before starting an SIP?
Yes, consulting a financial advisor can help you choose the right funds based on your risk appetite, financial goals, and investment horizon. This ensures your
SIP investment aligns with your overall financial plan.
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^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.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
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