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Why SIPs Are Gaining Popularity Among Investors?

Published On Sep 24, 2021

SIP, or Systematic Investment Plan, is the simplest approach to invest small sums of money in mutual funds and reap the most long-term benefits. While we have good intentions, we often put savings on the back foot in our busy lives, preferring to spend instead on luxuries and social pleasure. This is where a SIP can help with the discipline of saving on a regular basis by quietly working in the background. The cash is automatically debited from your bank account after you start the SIP. You can begin investing with as little as Rs 500 per month as a minimum. You can gradually increase your investment amount over time. One of the benefits of SIP is that you can start little and earn good returns. 

Why Are SIPs Gaining Popularity Among Investors?

Here are some of the key features of systematic investments plans that have made them a fantastic financial product and gain popularity among investors. 

  • Flexible - You can stop SIP at any moment without incurring any fines or penalties. There is no such thing as a lock-in period. SIPs are typically handy in an emergency because you can redeem the funds whenever you choose.
  • Offers the Provision to Skip Instalments - You can skip the payment if your bank account has a low amount and you are unable to pay for SIP. You will not be penalised for skipping a payment, as is the case with recurring deposits.
  • Multiple Investments - There are no limits on how many SIPs you can own. You have the option to open another SIP if you are able to save more. This will allow you to make a profit on both accounts. It is entirely up to you whether you open two or more SIPs; however, you must keep track of them on a frequent basis to avoid losing money.
  • Develops the Habit of Discipline - Regular saving habits help in the development of the discipline. Because you don't have to invest each month manually, an automated deduction of the SIP amount keeps you stress-free. It's best to choose a SIP deduction date after you've received your monthly paycheck. This ensures that you will save before you spend.
  • Small Investments - The SIP approach allows you to begin investing with as little as Rs.500 each month. Even if you choose an equity mutual fund, the payment mechanism allows you to invest in a cost-effective manner. You can progressively increase the SIP amount as your income rises.
  • Compounding Effect - The power of compounding is available to you if you follow a systematic investing plan. You can buy more units when the market is in a depression and fewer units when the market is thriving by using rupee cost averaging. The rupee cost averaging feature ensures that your SIP yields more returns than a lump sum investment. As a result, the overall cost of the unit will be lower in the long run.
  • You Don't Have To Time The Market - When investing in mutual funds using the SIP technique, you don't have to worry about timing the market. The rupee cost averaging mechanism kicks in, ensuring that you are unaffected by market swings.
  • Long Term Investments - Some investors make rash decisions when it comes to buying and selling mutual fund units. As a result, you should avoid investing emotionally when the market is up or down. SIP is a method of investing that asks you to commit to a scheme for a longer period of time. It's best to avoid purchasing or selling on the spur of the moment.
  • Past performance - In India, fund managers offer a variety of best SIP investing strategies. To choose the right one, you must examine a mutual fund's past performance in order to enjoy significant rewards. A continuously high-performing mutual fund is always the best option, but keep your risks and objectives in mind before investing.


Systematic investment plans are a secure way to invest in mutual funds. Moreover, if you're a young, first-time investor, a SIP is a great way to get started in the mutual fund market. The key to achieving superior returns include starting small and holding a fund for a longer period of time.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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