SIP Investing Basics: How a Systematic Investment Plan Works

A Systematic Investment Plan (SIP) is a way to invest a chosen amount into a mutual fund at regular intervals. The SIP is a contribution method; it is not itself a fund, a guarantee, or a protection against market losses.

The number of units bought at each instalment depends on the fund's applicable net asset value and transaction rules. The value of those units can go down as well as up.

Understand the scheme's investment objective, riskometer, costs, exit load and tax treatment. Match the fund and investment horizon to your own goals and risk tolerance rather than choosing a scheme only from past performance.

Keep emergency savings separate and check that recurring contributions remain affordable. SIP instructions may need to be stopped or changed through the fund house, registrar or platform used to set them up.

A calculator that assumes a constant annual rate is a mathematical illustration, not a forecast. Mutual fund returns vary, are not assured, and may be negative over some periods. Actual results also depend on the timing and terms of each contribution.

Use projections only to compare hypothetical scenarios. Read scheme documents and consult a qualified professional if you need personalized financial advice.