SIP (Systematic Investment Plan) — Mutual Fund Term Explained

Investing a fixed amount in a mutual fund at regular intervals — typically monthly. Builds discipline and uses rupee cost averaging to reduce timing risk.

A Systematic Investment Plan (SIP) allows you to invest a fixed amount (minimum ₹500 for most funds) at regular intervals. When NAV is high, you buy fewer units; when NAV is low, you buy more — averaging your cost over time.

SIPs are the most popular way to invest in Indian mutual funds. The monthly SIP book crossed ₹20,000 crore in 2024.

Formula

Units Purchased = SIP Amount ÷ NAV on SIP Date

Example

Monthly SIP of ₹5,000 at NAV of ₹25 → 200 units bought that month.

Related terms

• SWP (Systematic Withdrawal Plan) — Withdrawing a fixed amount from a mutual fund at regular intervals. Used to create regular income from a corpus — like a self-made pension.
• STP (Systematic Transfer Plan) — Automatically transfer a fixed amount from one fund (liquid/debt) to another (equity) at regular intervals. Used to deploy a lump sum gradually.
• Rupee Cost Averaging — The benefit of investing a fixed amount regularly: you buy more units when NAV is low and fewer when high, reducing your average cost.
• XIRR — Extended Internal Rate of Return. The most accurate way to calculate SIP returns — accounts for the exact timing and amount of each cash flow.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.