Why Should We Invest in SIP?

Have you ever thought why SIP is one of the most suggested methods of investing in mutual fund^^ schemes? Well, the main reason that SIP is recommended is that it helps in maximizing profit with the benefit of compounding. Today we are discussing in detail why should you invest in some of the best SIP plans?

Read more

SIP Insurance Plan Benefits
Start SIP with as low as ₹1000
Start SIP with as low as ₹1000
No hidden charges
No hidden charges
Save upto ₹46,800 in Tax
Save upto ₹46,800 in Taxunder section 80C^
Zero LTCG Tax
Zero LTCG Tax
Disciplined & worry-free investing
Disciplined & worry-free investing

  • Insurance Companies
  • Mutual Funds
Returns
Fund Name 5 Years 7 Years 10 Years
Virtue II PNB Metlife
Rating
20.71% 15.98%
14.2%
View Plan
Large Cap Equity Fund Tata AIA
Rating
18.66% 16.14%
13.38%
View Plan
Diversified Equity Fund HDFC Standard
Rating
15.34% 12.75%
12.73%
View Plan
Grow Money Plus Fund Bharti AXA
Rating
15.75% 13.48%
12.67%
View Plan
Pure Stock Fund Bajaj Allianz
Rating
17.66% 13.04%
12.3%
View Plan
Pure Equity Birla Sun Life
Rating
15.88% 11.61%
12%
View Plan
Growth Super Fund Max Life
Rating
14.75% 12.67%
11.26%
View Plan
Equity Fund SBI
Rating
13.7% 11.58%
10.45%
View Plan
Bluechip Fund ICICI Prudential
Rating
13.76% 10.96%
9.84%
View Plan
Growth Plus Fund Canara HSBC Oriental Bank
Rating
11.35% 9.08%
8.98%
View Plan

Updated as of Jan 2025

Compare more funds

  Returns
Fund Name 3 Years 5 Years 10 Years
Active Fund QUANT 24.92% 31.48%
21.87%
Flexi Cap Fund PARAG PARIKH 20.69% 26.41%
19.28%
Large and Mid-Cap Fund EDELWEISS 22.34% 24.29%
17.94%
Equity Opportunities Fund KOTAK 24.64% 25.01%
19.45%
Large and Midcap Fund MIRAE ASSET 19.74% 24.32%
22.50%
Flexi Cap Fund PGIM INDIA 14.75% 23.39%
-
Flexi Cap Fund DSP 18.41% 22.33%
16.91%
Emerging Equities Fund CANARA ROBECO 20.05% 21.80%
15.92%
Focused fund SUNDARAM 18.27% 18.22%
16.55%

Updated as of Dec 2024

Compare more funds

Whenever you think of a long-term investment plan and ask some experts about the same, he/she will suggest you to start investing in a Systematic Investment Plan (SIP). Here, we are discussing the advantages of investing in best SIP plans:

  • Advantage Because of the Power of Compounding: The meaning of compounding is to earn interest by investing again in the earned interest. In this way, the compounding can turn a small amount of money to a large corpus, if invested regularly. The experts of investment suggest starting to invest with a small amount at an early age than waiting for a big amount to start the investment. For example, if you start investing Rs.1, 000 monthly in an equity scheme for meeting your long term goal of 10 years, then with a 12% return you will get approximately Rs.2, 32, 339 after 10 years. On the other hand, if you start investing Rs.1, 500 for a goal of five years, you will get approximately Rs.1, 23, 729 after five years. You can also use an online SIP calculator to know your SIP returns as per your investment tenure.

  • You Include Financial Discipline in Your Financial Routine: Since most of us start investing in SIP to make a profit, but the one good habit that comes with it is financial discipline. Many of us start and then stop investing, the start of investment shows their optimistic approach whereas stopping the investment shows their pessimist approach. However, the SIP puts these doubts in an end as you invest regularly in it. In SIP you have to pay a fixed amount of money regularly irrespective of the conditions of the market. Since the money is debited directly from your account, thus there are very fewer chances for you to miss the investment. You can as well set the SIP payment date soon after your date of salary to avoid money spending before the date of SIP. The main reason for the same is – only a small investment can create large corpus in a long period. The simple example to understand this is – the retirement corpus that you cannot create overnight. Instead, you have to invest regularly to make a corpus of approximately Rs.1 Crore for your retirement.

    People Also Read: Systematic Withdrawal Plan (SWP)

    benefits-sip benefits-sip
  • To Average Your Purchase Cost: The stock market is very well known for its volatility and the investors try to avoid this problem by the market timing. This is, they purchase when the market is down and sell when the market is up. However, it is not easy for everyone to match the timings. This is because you can never know when the market can hit the bottom or goes high. Therefore, to average put your investment is to invest a small amount regularly for a long period. We are here giving a table that explains why should we invest in SIP? This table shows how SIP averages out the cost price. For this example, we are assuming that the NAV price is fluctuating between Rs.97 to Rs.105. Suppose the amount you invest in your SIP is Rs.2, 000 per month and the average cost price is most of the time low over a longer period.

Date of SIP NAV SIP Amount Number of Units (Amount of SIP/ NAV)
10-June-2016 100 Rs.2, 000 20
10-July-2016 105 Rs.2, 000 19.05
10-Aug-2016 103 Rs.2, 000 19.42
10-Sep-2016 100 Rs.2, 000 20.00
10-Oct-2016 98 Rs.2, 000 20.41
10-Nov-2016 97 Rs.2, 000 20.62
Total   Rs.12, 000 119.49
Average Cost Price of SIP Rs.100.43

 

  • Lower Investment Cost: It is always good to have expectations from your investment, especially when you are investing in equity schemes like SIP. The reason for the same is you get a robust strategy for making money. In SIP, you do not need to invest a large amount instead with a steady investment of a lower amount you can make money. In this investment, the fund manager keeps purchasing the units of the said schemes of mutual funds through your monthly SIP despite the stock market's state. In this way, with the lower investment, you can make a big corpus in some time.

  • You Can Easily Achieve Your Financial Objectives: Not having any plan makes it difficult to achieve anything that you want. You may have a plan of purchasing a house, but do not know how to achieve it. Since purchasing a house is a big project, so starting early is suggested. If you start investing regularly even with a small amount for a long period in investments like SIP, you can easily achieve your goal. In this way, SIP works as a way to easily achieve your financial goals, but to be clear about your goals is all that is needed. This is because; with a goal in your mind you can decide how much you want to invest and for how long.

People Also Read: XIRR Meaning

Final Words: These are some of the reasons to show you why we should invest in SIP. However, SIP is one of the prudent ways to achieve your financial goals, but all you need to do is to stay committed to regular investment. However, return through funds is not guaranteed and always subject to the risks of the market still SIP is one of the safest ways of investment for salaried people.

˜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).

SIP plans articles

Recent Articles
Popular Articles
Tax Saving SIP

03 Feb 2025

Tax Saving SIPs (Systematic Investment Plans) in Equity Linked
Read more
Top Performing Mutual Funds SIP in India

28 Jan 2025

For Non-Resident Indians (NRIs) looking to invest in the Indian
Read more
Best SIP for Short Term

27 Jan 2025

While SIPs are generally recommended for long-term goals, there
Read more
Investment in SIP is Good or Bad

24 Jan 2025

Investing in Systematic Investment Plans (SIPs) is one of the
Read more
SIP for Buying House

24 Jan 2025

Systematic Investment Plan (SIP) is a great way to save money if
Read more
SIP Calculator
  • 10 Apr 2018
  • 600055
An SIP is a disciplined way to invest in mutual funds. It involves contributing a fixed amount regularly
Read more
Best SIP Plans
  • 14 Feb 2020
  • 203462
Best SIP Plans to Invest in India in 2025 Systematic Investment Plans (SIPs) have become a popular investment
Read more
Best SIP Plans for 1,000 Per Month in 2025
  • 18 Feb 2022
  • 75428
Investing in the best sip plans for â‚ą1,000 each month is a smart way to grow your money. This article shares
Read more
SIP Investment Plans - Best SIP Funds to Invest in India
  • 01 Feb 2017
  • 1064551
A Systematic Investment Plan (SIP) is a smart and convenient way to invest in mutual funds. It allows you to
Read more
Best SIP Plan for 5 Years
  • 15 Apr 2020
  • 151758
SIPs are a great way of investing in mutual funds^^ for both long and short terms. It helps inculcate an
Read more

Invest ₹10K/Month & Get ₹1 Crore# on Maturity
*under 10(10D)
top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL