Find out how your monthly SIP investment grows with the power of compounding. Used for mutual funds, ELSS, index funds.
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SIP (Systematic Investment Plan) lets you invest a fixed amount in mutual funds every month automatically. It uses rupee-cost averaging — you buy more units when markets are low and fewer when high — which averages your purchase cost but does not remove market risk or guarantee returns.
M = P × {[(1 + i)^n – 1] / i} × (1 + i), where P = monthly investment, i = monthly rate (annual rate ÷ 12), n = total months. This assumes each instalment is invested at the start of the month; the result is an illustration at a fixed assumed return, not a forecast. Actual SIP returns vary with the fund and market.
SIP suits investing regular monthly income. Lumpsum means investing a large amount at once (like a bonus or maturity amount). Neither is certain to do better; outcomes depend on market movements and your time horizon.
ELSS funds (tax saving under 80C, 3-year lock-in), Index funds (Nifty 50, Sensex), Flexicap funds, and Bluechip funds are among the most popular SIP vehicles.
Q: What is the minimum SIP amount?
A: The minimum SIP amount is set by each fund house for each scheme, so it varies. Check the minimum in the scheme document or on the AMC site before you start.
Q: Is SIP return taxable?
A: Yes. For equity-oriented funds, gains on units held over 12 months are taxed at 12.5% on long-term gains above ₹1,25,000 in a year (Income-tax Act, 2025, section 198). Short-term gains (12 months or less) are taxed at 20% (section 196). Cess applies on top.
Q: Can I stop or pause a SIP?
A: Most fund houses let you pause or stop a SIP. Check your fund house terms, including any exit load that applies when you redeem units.
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