Know everything about the SIP option: What is an SIP, its benefits, and how it works

Investing is a crucial aspect of financial planning that helps individuals grow their wealth and achieve their financial goals. However, not everyone has a pre-existing corpus that they can invest to earn returns. In such cases, building a corpus through Systematic Investment Plans (SIPs) is the ideal way to go. An SIP is a convenient way of investing small amounts regularly in mutual funds, which enables individuals to build their wealth over a period of time. This article will discuss the importance of SIPs in building wealth and the benefits of investing through this mode. Here is a comprehensive guide to help you get started with SIP investing and make informed investment decisions.

What is an SIP?

Investing in mutual funds is a popular and effective way of growing your wealth. However, it can be difficult to accumulate a large sum of money to invest at once. This is where a Systematic Investment Plan (SIP) comes in as a useful tool. SIPs allow you to invest in mutual funds through smaller, regular instalments rather than a lump sum. This means you can invest regularly and consistently, even with limited funds. With SIPs, you can choose to invest at intervals, such as monthly, quarterly, or yearly, depending on your convenience and investment goals. The main objective of SIPs is to help you create a corpus over a longer period, by investing a small amount regularly.

Benefits of investing in SIPs

  • SIPs eliminate the need for a large corpus that was traditionally required to invest in mutual funds. With SIPs, you can start investing with a minimal amount, as low as you are comfortable with. You can choose to invest at intervals that suit you best – be it monthly, quarterly, or yearly.
  • They provide a disciplined investment approach by enabling automatic debiting of your investment amount every month from your account through autopay. This helps bring discipline to your investments and makes sure that you are consistently putting aside a portion of your funds towards your investment goals, regardless of market conditions or personal circumstances.
  • SIPs are flexible in nature, which means that you can adjust your investment as per your financial situation. There could be months when you are unable to invest due to some reason, but this will not impact the growth of your previous investments in any way. The autopay facility, which debits the investment amount from your account automatically, can also be changed to cater to your needs and ensure flexibility. With SIPs, you can invest in mutual funds at your own pace and comfort, making it an ideal investment option for those who are just starting out or those who prefer to have control over their investments.

How to start an SIP investment?

The first step to invest through an SIP is to choose a mutual fund. All mutual funds offer the option of investing through an SIP. Once you have selected the mutual fund, you can opt to for the mode and determine the monthly investment amount you wish to start with. This makes it simple and convenient for you to start investing in mutual funds, even if you have limited funds available at the moment.


It is important to keep in mind that while SIPs are a great tool for disciplined and flexible investing, there are always risks involved when it comes to investing. The risk is derived from the mutual fund you choose to invest in through SIPs, so it is crucial to make informed decisions and invest according to your goals and risk tolerance.