What is a Systematic Investment Plan? Why Systematic Investment plan is the best way for Investment in India?
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The systematic Investment Plan (SIP) is more popularly known as SIP. It is a facility offered by mutual funds to investors to invest their fixed amount of money at pre-defined intervals in the selected mutual fund schemes.

There are different types of Investment plans in India. Among all the Investment options, the Systematic Investment Plan is the best place in India to invest.

 SIP gives investors a chance to invest small sums of money over a longer period rather than having to make a large lump sum of money all at once. Most SIPs are weekly, monthly or quarterly.

 How SIP Works:- 

 SIP works based on periodic and consistent investments like recurring bank deposits. The Invest amount may be auto debited from the savings account as per the instructions provided by the investor.


The corresponding amount of mutual fund units has been allocated to you. Whatever units are received by the Investor, it is all depend on the NAV (Net Asset Value).

 How SIP Gives You Profit:-

 A good return comes from SIP only in the power of compounding interest. With Systematic Investment Plan, you’re investing a small amount of money for a longer duration and can get good returns.


 By investing a small amount at regular intervals you can build a large corpus and meet your long-term financial goals.

Why Systematic Investment plan is the best way for Investment in India?
ELSS-SIP IS THE BEST FOR Tax-saving-schemes-under-section-80C

Top 10 Systematic Investment Plan (SIP) as of 2022:-

Fund Name                     Monthly Investment                 3 Year Return

 1. HDFCBalance Advantage FUND       Rs.5000                  14.39%

 2. ICICI Prudential Bluechip Fund          Rs.5000                 19.41%

 3. Kotak Standard Multcap Fund            Rs.5000                14.15%

 4. Motilal Oswal Focused    Fund           Rs.5000                20.01%

 Small Investment in (SIP):- 

 Most mutual fund schemes allow you to start investing with as little as Rs100, Rs500, Rs1000 per month. This investment amount is considerably lower than most popular investment options such as FD and ETFs.


This ensures that a majority of people who have recently earned can invest to meet their goals. SIPs are flexible. For instance, if you start an Rs.1000 SIP in a mutual fund scheme of your choice, there is no need to keep on investing Rs. 1000 every month.


 If your savings increases in future, you have the option to adjust the SIP amount or even start a new SIP in the same mutual fund scheme.

Top 12 Benefits of Systematic Investment Plan( SIP)

1. SIP is ideal for people who are not looking to make lump sum payments for their mutual fund Investments.

2. The minimum amount usually required to be paid initially for any mutual funds is Rs, 5000.

3. The person who opts for a systematic investment plan can bring it down to Rs. 500 per month.

4. Systematic investment plan suits mutual funds investors For every budget.

5. Under this scheme, an investor can opt for a mutual fund’s investors, those who do not have a regular source of income.

Why Systematic Investment plan is the best way for Investment in India?

6. SIP is a mode of investment, which is very flexible therefore, it is beneficial to all kinds of investors.

7. In SIP, the person can stop the investment as and when required.

8. There is no penalty will give if the investors are not interested to continue the investment in future.

9. There is no additional charge that investors will pay to start any Systematic Investment Plan.

10. Mutual fund customers opt for SIP as this is paid either quarterly, monthly or maybe a weekly basis.

 11. SIP can be started online in a smooth and hassle-free manner by taking care of all formalities associated with this process.

 12. Systematic Investment plan can start with minimum requirement papers like, PAN no, IT details, Adhar Card, Address proof, etc.

Top 10 reasons for best ways for Investment in a Systematic Investment Plan (SIP).

1. Small Investment Amount:-

An Investor can begin investing with the use of SIPs because the minimum investment required to begin in a SIP is only Rs. 500 each month. or it may be Rs. 100

The investment amount is considerably lower than the most popular investment options such as FD & ETFs. SIP ensures the majority of people who start earning can meet their future goals.

2. Adjust the SIP Amount as and when required:-

SIPs are always flexible. If you start Rs. 1000 in SIP in a mutual fund scheme, it is your choice that you cannot invest each month. If your savings increase in the future, you have the option to adjust the SIP amount or you can start a new SIP in the same mutual fund scheme.

Investors can increase or reduce the SIP amount by first canceling the existing mandate and giving the revised one. Fundhouse does not charge any penalty for stopping SIPs. 


3. Stop or Skip the SIP as and when required:-

 There is no need to compulsorily deposit SIP investment every month for a fixed duration. You can skip the SIP for a few months or you may stop the investment if you do not have adequate funds to invest.

One can cancel or stop temporarily or permanently through various methods. It is always understood that an Investor   is voluntary investment (SIP). Hence no charges or fines can be imposed if the investor decides to stop in the middle before the lock-in period.

4. SIP makes you a Disciplined Investor.

Most Investors start Investing but struggle to keep Investing going for a long period. The most important feature of the SIPs is that it adds more discipline to your investment journey.


An amount fixed by you automatically gets invested in the scheme of your choice, eliminating the need for you to make a monthly Investment. Regular Investments are critical to achieving your financial objectives.

Systematic Investment Plan (SIP) always brings discipline to your investing path. You won’t have to make a monthly contribution on your own since a certain amount will be put into the plan of your choosing automatically.

5. Powers of compounding:-

Whatever interest you earn from SIP is the interest you earn on your accrued interest, which is known as compounding.

Hence, if you invest a given principal quantity of money in financial instruments and interest in it, you will also earn interest in your interest in the later years of your investment due to the compounding 


The power of compounding is an integral aspect of how mutual funds work and generating exponential returns over time is one of the advantages.

The idea behind a systematic investment plan (SIP) is to take advantage of the compounding impact by investing a small amount of money on regular periods.


Why Systematic Investment plan is the best way for Investment in India?

6. No Emotional Investing:

It can be very challenging for an investor not to get swayed by the ups and downs of the market.

SIP the market’s volatility often encourages people to make investments emotionally. For that purpose, their investment decision generally fails to get the expected results or returns.

However, the SIPs protect investors from making such emotional mistakes as the fund managers managing the investment.

7. Complete Transparency:-

To protect the interest of the Investors, AMFI & SEBI have introduced several stringent measures that every mutual fund scheme and AMC has to follow. SIP is always making very transpareancy to invest for future needs. SIP has made the mutual fund industry very safe for all investors.


The transparency of a SIP investor is the ability of decision-makers to monitor, control and manage processes to guarantee its successful completion. When a process is transparent to all those involved, it is easier for them to understand how it functions.

8. Online portfolio tracking:-

Most top AMC s in India now let Investors manage their fund investments online. Once you start a SIP, You will receive a User ID and password to access your account anywhere at any time.

 You can track your SIP, switch to a different scheme or stop the SIP, start a new SIP and you can redeem the units from sitting at home.

9. Reduces Mutual fund Units Average cost:-

SIPs also help to reduce the average cost at which you buy the mutual fund units. The NAV (Net Asset Value) of the fund is lower when the markets are falling and higher when the market outperforms.

The calculation of NAV mutual fund by dividing the total net assets by the total number of units issued.

For net assets, a fund subtracts any liabilities from the current value of the mutual fund’s assets and then divides the figures by the total number of units outstanding.

10. SIP helps you save money on a monthly basis by automating the process.

Becoming rich is a common goal of almost every investor and every individual, who is in their first stage of investment.


To achieve that goal, you need to modify your investment portfolio which can help you become rich and also meet your investment and long-term financial goals.

To start a monthly is one step, and you can enhance your investment annually to meet your investment needs as your income grows. SIP is a regular investment plan to grow wealth

You can initiate ECS on your bank account and also give your bank standing instructions to invest a certain amount every month automatically in SIP mutual funds.



1. Question:-Is SIP Tax-free?

1. Answer: SIP is one of the best tax savings instruments with high returns on your investments. For Income Tax purposes, you can deductions of up to Rs. 1.5Lacs from your taxable income which you are investing in ELSS through SIP under section 80C of the Income Tax Act, 1961.

2. Question:-How long should I invest in SIP?

2. Answer: Generally SIP carries an end date after 1 year, 3 years or 5 years of Investment. Investors can hence withdraw the amount invested he wishes or as per his financial goals.

3. Question:-Which mutual fund is tax-free?

3. Answer:-ELSS funds are the only tax savings funds within the Rs.1.5Lacs limit which has the additional advantage of giving equity-linked returns.

4. Question:-How many years will a Fixed Deposit double?

4. Answer:- To know the time duration in which your FD amount will get doubled, you have to divide 72 by the highest rate. For example, if the highest rate on FD is 7.05%, then the number of years in which your FD will get doubled is 72/7.5=10.21.

5. Question:-Can I withdraw SIP any time?

5. Answer:-If you have purchased a closed-ended scheme or open-ended scheme, you can redeem them at any time –

If you have invested in ELSS, you cannot redeem your units before 3 years. You can redeem your SIP investment on a business day.


We have all the dreams of buying a car or dream house gadgets etc. This comes in reality if we have strong financial planning. One of the best options is to start investing in mutual funds through a Systematic Investment Plan (SIP).

Mutual fund SIPs have become very popular among retail investors in India. As per AMFI data, there are 5.17 crore SIP accounts as of 28 th Feb 2022.

 More than 12000 crores were invested through SIPs in March -2022. In FY (21-22) more than Rs.1.25Lakh crore had been invested through the systematic Investment Plan (SIP) as of 31st March, 2022. 

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I am Ajay Kumar Patra. ( M.com & MBA-Finance) with 27years of Accounts & Taxation Experience in Large Manufacturing Units in India. In 2021 I started my own tax consultancy firm called “Ajay Tax consultant”. I started my Digital marketing on my website "www.odiyadigitalworld.com".I have already published more than 100 Blogs on Business, Finance, startups, Digital marketing & Tours & Travel for my viewers.

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