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An SIP isn't a product; it’s a method of investing. Instead of waiting for a "perfect" time to invest a large sum, you invest a fixed amount regularly (monthly or weekly).
Rupee Cost Averaging: When the market is down, your SIP buys more units. When it's up, it buys fewer. Over time, your average cost per unit stays lower.
Disciplined Savings: It automates your investment, ensuring you "pay yourself first" before you spend on lifestyle expenses.
The Power of Compounding: By staying invested, you earn "interest on your interest."
| Feature | SIP (Monthly) | Lump Sum (One-time) |
| Market Timing | Not required. | Highly critical. |
| Risk | Lower (spread over time). | Higher (if market drops tomorrow). |
| Ideal For | Salaried individuals. | Investors with a windfall (bonus/sale). |
| Psychology | "Set it and forget it." | Requires high emotional control. |
Small amounts, when invested consistently, yield massive results. Let’s look at the "Wealth Effect" assuming a 12% annual return (a common benchmark for diversified equity funds over the long term):
| Monthly SIP | After 10 Years | After 20 Years | After 30 Years |
| ₹5,000 | ~₹11.6 Lakhs | ~₹49.9 Lakhs | ~₹1.76 Crores |
| ₹10,000 | ~₹23.2 Lakhs | ~₹99.9 Lakhs | ~₹3.53 Crores |
| ₹25,000 | ~₹58.1 Lakhs | ~₹2.49 Crores | ~₹8.82 Crores |
Note: Figures are rounded estimates. Real returns vary based on market performance.
As your salary increases each year, your SIP should too. Adding a 10% Step-Up annually can nearly double your final corpus compared to a flat SIP.
Example: A ₹10,000 SIP that grows by 10% every year for 20 years results in a much larger wealth pool than a static ₹10,000 SIP, as you are effectively fighting inflation in real-time.
Pausing during a Market Crash: This is actually the best time to keep your SIP going, as you are buying units at a "discount."
Starting Too Late: Every year you delay reduces your final wealth significantly due to lost compounding time.
Checking the Balance Daily: SIPs are long-term tools. Frequent checking can lead to emotional decisions (panic selling).
Define a Goal: Is this for a house (5 years), a car (3 years), or retirement (20 years)?
Pick a Category: * Aggressive: Small/Mid-Cap Funds.
Balanced: Index Funds or Flexi-Cap Funds.
Automate: Set an "Auto-pay" instruction with your bank so the money leaves your account the day after your salary arrives.
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