Investment Strategy

What is a SIP? A Complete Guide to Systematic Investing

Published on September 5, 2025

Want to invest in the market but worried about timing it right? A Systematic Investment Plan (SIP) could be your answer. SIPs are a simple, disciplined approach to investing that allows you to build wealth over time without the stress of trying to predict market movements.

How Does a SIP Work?

A Systematic Investment Plan is a method of investing a fixed amount of money at regular intervals (usually monthly) into a mutual fund. Instead of investing a large lump sum at once, you invest smaller amounts consistently. This approach has two powerful benefits:

1. Rupee Cost Averaging

When you invest a fixed amount regularly, you buy more units of a mutual fund when the price is low and fewer units when the price is high. Over time, this averages out your purchase cost and can reduce the impact of market volatility on your investment.

2. The Power of Compounding

Compounding is the process where your investment returns start earning their own returns. By investing regularly through a SIP, you give your money more time to grow, and the effect of compounding becomes incredibly powerful over the long term.

See Your Potential Returns

Ready to see how a SIP can work for you? Use our free, powerful SIP Calculator to project your investment growth and plan for your financial goals.

USE THE SIP CALCULATOR →

The Formula Behind SIP Returns

For those who like to see the math, the future value (M) of a SIP can be calculated using the formula: M = P × ({[1 + i]^n – 1} / i) × (1 + i)

  • P is the amount you invest at each interval.
  • i is the periodic rate of interest.
  • n is the total number of payments.

While the formula is useful, our calculator does the heavy lifting for you, providing instant and accurate projections.

Conclusion: Why Start a SIP Today?

A SIP is an ideal strategy for long-term investors who want to build wealth in a disciplined manner. It removes emotion from investing, leverages the power of compounding, and makes market volatility work in your favor. The best time to start investing was yesterday; the second-best time is today.