Systematic Investment Plan
An arrangement to invest a fixed amount in a mutual fund at regular intervals, usually monthly.
Formula
Future Value = Instalment x [((1 + r) raised to n - 1) / r] x (1 + r), where r is the periodic return and n the number of instalments
Unit
₹
In depth
A SIP is a method of investing, not a product and not a fund — the returns come entirely from the scheme chosen, and a SIP into a poor fund produces poor results reliably. Its genuine benefits are behavioural and mechanical: it removes the decision of when to invest, and it buys more units when prices are lower. It does not guarantee profit, and over a long rising market a lump sum invested at the start would have done better, because the SIP money spent less time invested. Its real value is that it is a plan someone can actually keep to.
Worked example
₹10,000 a month for 15 years at 1% monthly grows to roughly ₹50.4 lakh against ₹18,00,000 invested. The ₹32.4 lakh gain came from time and compounding, not from the SIP mechanism itself.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Systematic Investment Plan” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.