What is a SIP and how does it actually work?

A Systematic Investment Plan (SIP) is a method of investing a fixed sum in a mutual fund scheme at regular intervals — typically monthly — rather than investing a lump sum at once.

Because you invest the same amount regardless of whether markets are up or down, you automatically buy more units when prices are low and fewer when prices are high. Over time, this averages out your purchase cost, a principle known as rupee-cost averaging.

SIPs also build the habit of disciplined, long-term investing, taking emotion out of the decision of when to invest. Most funds allow SIPs starting from as little as ₹100–₹500 per month.

This article is for educational purposes only and does not constitute investment advice.