Reading room · Mutual fund education · Published 2026-11-10

How a SIP works

A SIP invests a fixed amount at regular intervals, so you buy more units when prices are low and fewer when they are high.

Confirmed facts

• A systematic investment plan (SIP) moves a fixed amount from your bank to a fund on a set date.
• Units are bought at that day's NAV, so the same amount buys more units when the NAV is lower.

Historical data

• This is called rupee-cost averaging. It does not remove the risk of loss; it spreads your entry over time.

Interpretation

• A SIP suits people who invest from income, because it builds a habit and avoids guessing the best day to start.

Forecasts and assumptions

• Any future return you enter in a SIP calculator is an assumption you choose, not a forecast.

Sources

• AMFI: Investor education
• SEBI: Investor education

Educational content, not advice. Disclaimer