What is SIP (Systematic Investment Plan)?
A Systematic Investment Plan (SIP) is an automated way to invest a fixed amount in a mutual fund every month, regardless of market conditions. SIPs were popularized in India and are now offered globally. The investor sets a monthly amount, frequency, fund choice, and duration. The amount is auto-debited from the bank account on the chosen date and invested at that day's NAV.
Why it matters for investors
SIPs benefit from rupee-cost averaging โ when markets fall, your fixed amount buys more units; when markets rise, you buy fewer. Over long periods, this smooths out volatility and removes timing decisions. SIPs also enforce discipline (auto-debit prevents skipping contributions in fearful markets) and harness compounding (small monthly amounts grow significantly over 15+ years).