Investing in shares may sound complex, but it doesn’t have to be. A stock SIP makes it simple, affordable and consistent. It’s a beginner-friendly way to start your stock market journey. You can start without needing a big budget or perfect timing.
Keep reading to understand more about what is SIP in stock market and how to start one with confidence.
What is Stock SIP?
SIP meaning in stock market is simple. It’s very much like your regular SIP in mutual funds. In a mutual fund SIP, you buy fund units at the current Net Asset Value (NAV). But with a stock SIP, you buy shares of specific companies directly. Just like mutual fund SIPs, you can set it up weekly, monthly or even every few months. Pick a frequency that fits your liquidity requirements and goals.
For example, you can choose to invest ₹3,000 every month in shares of TCS or Infosys. Your stock SIP will automatically use that amount to buy as many shares as possible based on their current market price. This takes away the stress of timing the market and helps you grow your investments step by step.
Why Choose SIP in Stocks?
SIP in stock market is a popular tool. That’s because it offers several benefits, especially for beginners and long-term investors. Here’s why setting up an SIP in stock market is a smart move:
Start with small amounts: Unlike lump-sum investing, you don’t need a sizeable investment in one go. You can begin with as little as the cost of one share.
Removes the stress of timing the market: Many new investors try to buy at the ‘right time’. But market timing is hard, even for experts. With a stock SIP, you don’t need to worry about timing at all.
Helps with cost averaging: This is a simple but powerful concept. When prices are low, you buy more shares. And when prices are high, you end up buying fewer. Over time, this averages out your cost. This reduces the impact of short-term price movements.
Encourages disciplined investing: By setting up a SIP, you create a habit of investing. It becomes a monthly activity, just like paying a bill or saving for a goal.
Gives you full control: You choose the companies to invest in, how much to invest and how often. Unlike mutual funds, where a fund manager makes investment decisions on your behalf, a stock SIP works differently. Here, you stay in charge and choose the stocks you want to invest in.
Great for long-term growth: Stocks tend to perform well in the long run. By staying invested through SIPs, you can take advantage of this compounding effect.
Who Should Consider Stock SIPs?
A SIP in stock marketis versatile. Here are a few profiles that benefit most from stock SIPs:
First-time investors: If you’re new to the stock market and want a simple way to begin, a stock SIP is a perfect option.
Young professionals: Just started earning and want to build wealth? A SIP helps you invest in line with your monthly salary.
Busy individuals: Don’t have time to monitor markets daily? Stock SIPs let you invest automatically and stress-free.
Long-term savers: If your goal is wealth creation over 5 to 10 years, stock SIPs help you grow steadily without needing big funds upfront.
Experienced investors: If you prefer choosing your own stocks instead of relying on fund managers, stock SIPs offer that control. The best part is that they also help you stay consistent with your investments.
How to Set Up a Stock SIP Plan?
Setting up a stock SIP is quite easy. You just need a trading account and access to a broker or investment app that supports this feature.
Here’s how to do SIP in stocks:
Open a trading and demat account: You’ll need this to buy and hold shares. Most brokers offer a simple online account opening facility.
Choose your broker or platform: Make sure they offer the stock SIP option. Most leading platforms like Zerodha, Groww and Upstox have this feature.
Pick your stocks: Do some research. Choose companies that are financially strong and have good long-term growth prospects.
Set the amount and frequency: Decide how much you want to invest and how often. You can opt for monthly, fortnightly or even quarterly transactions.
Automate the SIP: Most platforms let you schedule the SIP. Once set, the amount will be debited automatically. These shares will then be added to your portfolio on the scheduled date.
It’s a practical way to invest, especially when you don’t have a lump sum saved. With stock SIPs, you can build wealth steadily without market timing stress.
However, life can be unpredictable. But when emergencies come up, stopping your SIP isn’t the only option. You can always consider a Fibe Personal Loan instead. You can borrow up to ₹5 lakhs with no collateral. The process is fully digital and you get up to 36 months to repay. It’s a simple way to manage urgent needs while staying on track with your investments.
FAQ on Stock SIP
Is a stock SIP good?
Yes. Stock SIPs are a great option if you want to invest regularly. They build discipline, lower timing risk and support long-term growth.
Systematic Investment Plans (SIPs) are designed to build wealth gradually. Once started, they run automatically every month. But if you’re facing a temporary money crunch or need to pause investing for a while, there’s a simple solution.
Instead of cancelling your SIP, you can pause it. This guide explains how to pause SIP, how long you can pause it for and what happens to your investments during that break.
What is SIP Pause Facility?
The SIP pause facility allows you to stop your SIP temporarily without permanently closing it. You won’t need to start over or create a new SIP when you’re ready to invest again. Most mutual fund companies and online brokerage platforms offer this feature. It’s a helpful option if:
You’re facing a cash crunch
You want to rebalance your goals
You need time to manage other expenses
The pause period depends on the fund house or platform you’re using. Usually, you can pause your SIP for 1 to 6 months. Some fund houses allow even longer pauses up to 12 months, but this varies. You’ll need to choose the number of months when you submit your pause request.
It’s important to know that you can’t pause SIP forever. If you need a longer break, cancelling may be a better option. But if it’s just a short-term issue, pausing works well and keeps your investment record intact.
Can We Pause Mutual Fund SIP Anytime?
Yes, in most cases. But there are a few conditions. Each fund house has its own policy. Some allow pausing only after the first few SIP installments are completed. Others might let you pause from the second month itself. You’ll also need to submit your pause request in advance, at least 15 to 21 days before your next SIP date.
Here’s how you can check the pause terms:
Log in to your mutual fund platform or AMC website
Go to your active SIPs
Look for the ‘Pause SIP’ option
Read their specific terms before applying
How to Pause SIP?
Here’s a quick step-by-step guide on how to pause SIP online:
Step 1: Login to your investment platform
This could be Groww, Paytm Money, Zerodha, ET Money or the AMC’s own portal.
Step 2: Go to your active SIPs
Choose the one you want to pause.
Step 3: Click on ‘Pause’
Look for options like ‘Pause SIP’ or ‘Modify SIP’.
Step 4: Select the duration
Choose how long you want to pause your SIP. Most platforms let you pick a short break based on your needs.
Step 5: Submit the request
Cross-check your selection and wait for confirmation.
You will get a message or email confirming the SIP pause. You can also pause your SIP offline by informing your AMC or through your mutual fund advisor. Just fill out the pause request form and submit it to your AMC, CAMS or KFintech branch with the necessary details.
Things to Know Before Pausing Your SIP
Before using the SIP pause facility, it’s best to keep these points in mind:
No penalty involved: Most fund houses don’t charge any fee to pause. But always double-check.
NAV missed during pause: You won’t get units during this break. So if the market dips, you miss the chance to buy more at a low price.
Returns not affected: Past investments stay as they are. Their value will keep changing with the market.
Avoid frequent pauses: Use this feature only when needed. Too many breaks can slow down long-term wealth building.
Does Pausing SIP Affect Returns?
When you pause an SIP, you stop investing new money. But the money already invested continues to stay in the market. So, returns on your past investments stay unaffected. They’ll still grow based on market performance.
But SIPs work best with consistency. By investing every month, you benefit from rupee cost averaging. That is buying more units when prices are low and fewer when they’re high. Pausing your SIP breaks this cycle, which might slightly reduce your long-term gains. That’s why it’s important to use the pause option wisely.
When Should You Use the SIP Pause Facility?
If you’re asking yourself can I pause my SIP without disrupting my long-term plan, the answer is yes. This is especially useful during temporary financial challenges. The SIP pause facility is designed to offer flexibility when your cash flow is under pressure. Here are some scenarios where it may be the right move:
Temporary financial crunch: Such as salary delays, medical bills, or urgent family needs
Short-term expenses: Like school fees, rent hike or a planned purchase
Revisiting your investment goals: If you’re planning to change your SIP amount or switch funds
Job changes or career gaps: You may want to pause till your income is stable again
It’s always better to pause than to cancel. But if you’re planning to pause your investments purely due to short-term liquidity concerns, there’s an alternative worth considering. Instead of pausing your SIP, you could keep your investments running and explore a Loan Against Mutual Funds with Fibe.
With Fibe, you get access to funds starting from ₹15,000 up to ₹10 lakhs, with no paperwork and disbursal in just 10 minutes.Your money stays invested and continues to grow. Meanwhile, you get access to instant funds when you need them most!
FAQs on How to Pause SIP
Can I pause my SIP anytime?
If you’re wondering, can we pause mutual fund SIP easily? The answer is yes. Most fund houses have a provision for it. Always check their policy and apply 15-21 days before your SIP date.
What is the period of the SIP pause?
You can usually pause your SIP for 1 to 6 months. Some AMCs allow longer pauses, up to 12 months. You can always select the pause duration while submitting your request.
Does pausing SIP cause a penalty?
No, there is no penalty in most cases. But try not to pause too frequently. SIPs work best when you stay consistent.
Starting your investment journey doesn’t need to be overwhelming. An SIP investment plan lets you begin with as little as ₹500 a month and slowly build wealth. It keeps things simple, takes the guesswork out of investing and helps you stay consistent.
Whether you’re saving for a new phone, a car or your retirement, SIPs can help you get there. Many investors in India prefer SIPs over lump sum investing because they are easy to manage and fit every budget.
But before you start exploring the best SIP plans for investment, let’s first understand what a SIP really is and how it works.
What is a Systematic Investment Plan (SIP)?
An SIP investment plan in India is where you invest a fixed amount every month or quarter in a mutual fund. Think of an SIP like putting money into your piggy bank every month, but smarter. Instead of just saving, that money gets invested and can grow faster over time.
Once you start an SIP, a fixed amount is automatically deducted from your bank account on a set date. It’s then used to buy mutual fund units based on the day’s NAV (Net Asset Value). You don’t have to worry about tracking the market daily. When prices are low, you buy more units. And when prices are high, you buy fewer. Over time, as the mutual fund grows, your investment grows too.
Reasons Why SIP is One of the Best Ways to Invest
Here’s why an SIP investment plan in India is so popular:
Compounding builds wealth: SIPs let your money earn returns on previous returns. It’s like a snowball effect. The earlier you start and the longer you stay invested, the more your wealth can grow.
Handles market ups and downs: SIPs follow rupee cost averaging. When the market is down, you get more units. When it’s up, you get fewer. Over time, this smooths out the cost of investing without needing to time the market.
Set it and relax: Once you start a SIP, everything happens on autopilot. The amount is deducted from your account each month, and you can easily track or change your investment online. It’s simple, even if you’re just getting started.
Withdraw when needed: Most SIPs don’t lock in your money, except ELSS funds, which have a 3-year lock-in. Compared to options like PPF or NPS, SIPs offer more liquidity. You can take out your money anytime if needed.
Start small: SIPs are accessible to everyone. Seasoned investors, amateur investors even students can start SIPs. You can always begin with a smaller contribution and keep increasing over time. It helps build the habit of saving regularly.
Fits every goal: Whether it’s saving for a house, a trip or retirement, SIPs work for all goals. You can even run separate SIPs for different needs. All you have to do is choose funds based on your time horizon and comfort with risk.
How to Invest in SIP Plan?
Starting a SIP is quick and simple. Here’s what you need to do:
Step 1: Choose your goal
Decide why you’re investing, short-term or long-term.
Step 2: Pick the fund
Based on your goal and risk level, choose an equity, debt or hybrid fund.
Step 3: Select the amount and frequency
Decide how much you want to invest and how often.
Step 4: Complete KYC
Submit your basic documents digitally to your mutual fund platform.
Step 5: Start SIP online
Set up auto-debit from your bank and let the SIP run on autopilot.
You can do this on platforms like Groww, Zerodha, Paytm Money or through AMC websites.
SIP Tips for Beginners
If you’re new to investing and unsure about how to invest in SIP for beginners, start simple. Here are a few easy tips to help you begin your journey:
Start early: The earlier you begin, the better compounding works in your favour.
Link goals to SIPs: Tag each SIP to a goal to stay motivated and invested.
Avoid stopping in dips: Don’t pause SIPs when markets are bearish. That’s when you actually get to capitalise and buy in at lower prices.
Review every 6 months: Don’t over-monitor. Every 6 months or even once a year is enough to check fund health.
If you’re new to investing, SIPs are a great place to begin. They’re simple, low-maintenance and work for all goals. Just pick a goal, choose a mutual fund and set up a monthly SIP. That’s it.
And if you ever need cash urgently, you don’t have to stop your SIPs. With Fibe, you can get a Loan Against Mutual Funds up to ₹10 lakhs with no paperwork. Loans start from ₹15,000, and the money gets disbursed in just 10 minutes. Your SIPs stay untouched, and your plans keep moving forward!
FAQ on Why SIP Investment is the Best Way to Invest
Why is SIP investment good?
SIPs are easy to start, and you don’t need a large lump sum to begin. They help you stay disciplined and skip the stress of timing the market. Over time, your money grows with compounding. That’s why SIPs are seen as one of the most reliable ways to invest.
When it comes to long-term investing, NPS and SIP both come up as top choices. One is built for retirement, the other for flexible wealth creation. The NPS vs SIP debate depends on your goals, risk appetite and how much control you want. To make that call, it’s important to know how they work, what they offer and how they fit into your financial plan.
Read on to understand the differences and make an informed choice.
What is NPS?
The National Pension System (NPS) is a retirement savings scheme backed by the Government of India. It helps you build a pension fund through regular investments during your working years.
You can open an NPS account online. There are 2 types of accounts:
Tier I Account: This is the main retirement account. It comes with tax benefits and a lock-in till the age of 60. You must use this if you’re investing in NPS for retirement.
Tier II Account: This is optional and can be opened only if you have an active Tier I account. It works like a regular savings account. You can withdraw anytime.
Once your account is active, you choose how your money is invested. This can be done in two ways:
Active Choice: You decide how much to invest in equity, corporate bonds and government securities. It gives you full control over your portfolio.
Auto Choice: The system manages your investments based on your age. As you grow older, the equity part of your NPS investment slowly reduces. This helps keep your money safer over time.
You can pick from 3 risk levels based on what suits you:
LC75: This plan is aggressive. It keeps more money in equity for longer. Suitable if you can take higher risks.
LC50: Offers a balance between equity and debt, giving you a middle ground.
LC25: Focuses more on safety by reducing equity early, ideal if you prefer low risk.
So, if you’re wondering which NPS scheme is best? It ideally would depend on how comfortable you are with risk. And also on how hands-on you want to be.
Key features of NPS
Regulated by PFRDA: Governed by the Pension Fund Regulatory and Development Authority
Eligibility criteria: Open to all Indian citizens aged 18 to 70
Low cost: Account maintenance charges are minimal
Tax benefits: You can claim deductions up to ₹2 lakh under Section 80C and 80CCD
Withdrawal rules: Tier I funds can be withdrawn only after age 60, with partial access after 3 years
Pension payout: A portion of the corpus must be used to buy an annuity for a monthly pension
What is SIP?
SIP stands for Systematic Investment Plan. It is a simple way to invest small amounts in mutual funds regularly. You can choose to invest every month or even quarterly. Basically, instead of investing a big lump sum, you invest a fixed amount at set intervals. This helps you build wealth slowly and steadily over time.
You can start a SIP with as little as ₹500 per month. The money is invested in mutual fund schemes of your choice. These can be:
Equity funds for higher returns
Debt funds for stability
Hybrid funds for a mix of both
SIPs are managed by fund houses. You don’t need to pick individual stocks or bonds. The fund manager does that for you.
Minimal restrictions: No lock-in period unless it’s a tax-saving ELSS fund (3 years). You can withdraw anytime
Returns vary with the market: Your growth depends on how the fund performs and overall market conditions
You’re in control: You can start, pause or change your SIP anytime. No penalties
Goal-based investing: Works for both short-term and long-term financial needs
Power of compounding: Long-term SIPs help your money grow by reinvesting gains over time
Rupee cost averaging: Investing regularly helps smooth out market ups and downs by averaging the purchase cost
NPS vs SIP: Key Differences Explained
Both NPS and SIP can help you build wealth, but they serve different goals. Here’s how they differ:
Feature
NPS
SIP in Mutual Funds
Goal
Mainly for retirement
Any life goal, short or long term
Lock-in
Till age 60
No lock-in (3 years for ELSS funds)
Risk level
Low to moderate
Low to high (based on fund type)
Liquidity
Low, limited withdrawals
High, you can withdraw anytime
Tax benefits
Up to ₹2 lakh under 80C + 80CCD
ELSS only, up to ₹1.5 lakh under 80C
Post-retirement use
Monthly pension through annuity
Full or partial withdrawal as a lump sum
Both NPS and mutual fund returns depend on market performance and the funds you choose.
Which Option Suits You Better?
If you’re choosing between NPS vs mutual fund, the right option depends on your timeline and comfort with risk. It also comes down to how you plan to use the money later.
When NPS is a better fit
NPS works well if you’re focused on retirement. It suits you if:
You want long-term savings with low risk
You’re looking for tax benefits under 80C and 80CCD
You don’t need access to funds before age 60
You want a pension after retirement
If you’re wondering is NPS a good investment, it’s one of the most reliable tools for building a retirement corpus.
When SIP works better
SIP offers flexibility and suits a variety of goals. Opt for SIP if:
You’re saving for financial goals like a home, a trip or education
You want to start small and stay consistent
You prefer easy withdrawals and control over your investments
You’re comfortable with more market exposure and risk for higher returns
Instead of choosing between NPS vs mutual fund, many investors use both. NPS for retirement and SIP for other life goals. But while you invest for the long term, life can bring unexpected expenses in the short term. So, if you ever need funds without breaking your savings, Fibe has your back.
Get an instant personal loan up to ₹5 lakhs. No paperwork, no collateral, just quick cash when you need it most. Download the Fibe App and stay financially ready!
FAQs on NPS vs SIP
How to get a ₹50,000 pension per month in NPS?
You can use the NPS pension calculator to estimate how much you need to invest. For a ₹50,000 monthly pension, you may need a corpus of ₹2.5 crore at retirement. The exact amount depends on your age, returns earned and annuity rates.
Does NPS allow SIP?
NPS doesn’t offer SIP like mutual funds, but many platforms let you automate monthly contributions. This works just like a SIP and helps you invest regularly without manual effort.
Systematic Investment Plan (SIP) has become a popular way for investors to invest in mutual funds. By investing a fixed amount regularly, SIPs allow you to take advantage of rupee cost averaging and the power of compounding over long periods. However, with hundreds of mutual fund schemes available, how to choose SIP can be confusing.
Here are 5 factors to keep in mind when selecting mutual funds for SIP:
1. Long-term Performance
The first factor is the long-term performance of the mutual fund scheme. Analyse the fund’s performance over at least 5-7 years. This will give you an idea of how the fund has performed across different market cycles. Choose mutual funds for SIP that have consistently performed well over the long term. Avoid funds that show inconsistent performance with extremely well-performing and poor-performing years.
Compare the returns with category benchmarks as shown in the table above. Select MF for SIP that has outperformed its benchmark more often than not.
2. Portfolio Composition
Analyse where the fund is investing the money. The sectors and stocks in a fund’s portfolio can significantly impact its performance. Prefer funds that follow a consistent investment strategy, even if they have underperformed in the short term.
3. Fund Manager’s Track Record
The fund manager plays a key role in the performance of a mutual fund scheme. Choose mutual funds for SIP where the fund manager has ample experience in investing in different market cycles. Also, check that the fund manager has been managing the scheme for at least 2-3 years. Avoid funds where the fund manager keeps changing frequently.
4. Risk Profile
Every investor has different risk tolerance levels. Match the level of risk you are willing to take to the risk profile of the fund. Risk-averse investors should opt for large-cap mutual funds, while those willing to take on more risk can choose mid-cap and small funds. Also, consider investing in a mix of funds with different risk profiles.
5. Fees & Charges
Compare the expense ratios of different funds before investing. Select an MF for SIP that offers a similar investment style and portfolio composition at lower costs. This may not significantly impact returns in the short term, but it makes a major difference in long-term returns from SIP.
Conclusion
So keep the above 5 factors to keep in mind when finding answers to the question – How to select MF for SIP – to make optimal mutual fund selections for systematic investments. Analyse both quantitative metrics and qualitative aspects of fund performance over long periods. This will help create a high-performing mutual fund portfolio that helps you achieve your financial goals.
Additionally, if you find yourself in need of liquidity but don’t want to disrupt your investment strategy, Fibe Loan Against Mutual Funds is a viable option. This loan allows you to access funds quickly by pledging your mutual fund units as collateral, offering you up to ₹10 lakhs* in instant disbursal. The best part? You only need to pay interest-only EMIs. It’s a smart way to keep your investments intact while managing urgent cash flow requirements.
FAQs
What are the benefits of investing through SIP?
Some of the benefits of investing through SIP are:
Disciplined investing: SIP inculcates discipline to invest regularly without worrying about market volatility
Power of compounding: Automatic monthly investments accumulate and compound wealth over long periods
Rupee cost averaging: Helps reduce the average cost of fund units by investing a fixed sum every month
Can I modify my SIP amount over time?
Yes, most mutual funds allow investors to modify the SIP amount and even tenure as per changing life situations and financial capacity. You have to just submit a request to modify the SIP to the mutual fund where you hold your SIP investment.
What is the ideal SIP tenure I should opt for?
The ideal SIP tenure is as long as possible, preferably 10-15 years or more. Longer SIP tenures allow your investments to realise the maximum benefits of rupee cost averaging and compounding returns. For retirement planning, you may need SIP investments of 20-25 years to accumulate a sufficient corpus. However, you can start small with just 3-5 years and then extend the SIP tenure.
What should be my ideal SIP amount?
There is no fixed ideal SIP amount. SIP allows starting small with just Rs. 500-1,000 per month. So, determine your financial capacity and investible surplus each month, after accounting for basic expenses. Most experts suggest investing 15-20% of your monthly income towards SIPs if your goal is long-term wealth creation. Increase the monthly SIP amount each year by 10-20%, depending on income hikes, to accelerate wealth creation.
A common dilemma for many investors is choosing between a Systematic Investment Plan (SIP) and mutual funds. While both allow you to invest money in the stock market, there are some key differences between SIP and mutual funds.
Read on to understand the comparison of SIP and mutual fund differences across various parameters to help you decide which investment vehicle better suits your needs.
What is an SIP?
A Systematic Investment Plan or SIP is a method of investing a fixed sum of money at regular intervals to purchase units of a mutual fund scheme. The key features of SIP are:
Fixed periodic investments: You invest a set amount, e.g. ₹5,000 every month on a pre-defined date. This invests your money across both highs and lows of the market.
Auto-debits from bank account: The SIP amounts get automatically deducted from your bank account on their due dates.
Long-term investing: SIP encourages investing discipline for 5-10 years or more.
Flexible – You can choose the SIP date, amount and interval (weekly, monthly, etc). You can also pause or stop investments anytime.
What are Mutual Funds?
A mutual fund pools money from numerous investors and invests it across stocks, bonds and other assets. Each investor owns shares or ‘units’ proportional to their investment amount. The key aspects are:
Professional management: The funds are managed by qualified fund managers who take all investment decisions.
Diversification: By investing across asset classes and securities, mutual funds reduce the overall risk of the portfolio.
Variety of schemes: Funds offer schemes catering to different investment horizons, asset classes and risk appetites of investors.
What is the Difference Between SIP and Mutual Fund
Now let’s compare SIP and mutual funds on various aspects:
Criteria
SIP (Systematic Investment Plan)
Mutual Fund
Definition
A disciplined way to invest in mutual funds is by contributing a fixed amount at regular intervals.
A pool of funds collected from investors for investment in stocks, bonds, or other assets.
Lump sum or through SIP (as a mode of investment).
Minimum Investment
As low as ₹500 per month (varies by fund).
Varies by fund; often requires a lump sum investment.
Risk Exposure
Spread over time, reducing market timing risks.
Risk depends on the type of mutual fund (equity, debt, etc.).
Investment Horizon
Suitable for long-term goals (5+ years).
Suitable for both short-term and long-term investments.
Return Potential
Potential returns depend on the market performance over time.
Potential returns vary based on the type of mutual fund and market conditions.
Flexibility
Highly flexible; you can stop or increase the SIP anytime.
Less flexible if investing through a lump sum; SIPs allow regular investments.
Taxation
Same tax treatment as mutual funds; long-term capital gains (LTCG) or short-term capital gains (STCG).
Tax treatment depends on the fund type and investment duration.
Goal
To invest small amounts regularly to build wealth over time.
To pool money for various investment objectives, including growth, income, etc.
Ideal For
Beginner investors who want to invest systematically and benefit from rupee cost averaging.
Investors who prefer lump-sum investments or who want exposure to specific sectors.
Returns
SIP returns are dependent on the type of mutual fund scheme you invest in – equity, debt or hybrid. Depending on your risk appetite and investment horizon, you can choose suitable schemes for your SIPs.
Mutual funds also provide varied returns based on their underlying assets. Equity funds tend to provide inflation-beating returns over the long run but can be very volatile in the short term.
Overall, mutual funds offer the benefit of professional management of money across assets, while SIPs make investing easier through smaller periodic investments.
Liquidity
One of the biggest advantages of SIPs is that they allow easy exit – you can simply stop the auto-debit to your account anytime. Most funds also allow you to temporarily pause SIPs or withdraw money from your investments anytime without penalties.
Some mutual funds, however, have lock-in requirements, so your money is not freely accessible for that period.
So, SIPs score higher in terms of providing better flexibility and liquidity.
Costs
The key costs involved in both include:
SIP
Fund management charges
Transaction costs
Mutual Fund
Fund management charges
Transaction costs
Brokerage fees
Exit load in case of premature withdrawal
So, mutual funds tend to have higher costs. The exit load for redeeming units early also reduces returns. SIPs allow long-term investing without having to worry about withdrawal penalties.
Ease of Investment
The entire SIP process, from signing up to tracking investment, is fully digitised through online platforms and apps. You can set up SIPs quickly in a paperless manner and automate your contributions for seamless investing.
While many mutual funds also offer online investment options now, the traditional process often requires physical document submissions and complex paperwork. So, SIPs provide a simpler process.
Conclusion
In summary, SIPs make regular investing easy through auto-debits and provide flexibility of entry/exit. Mutual funds manage pooled money across a variety of assets but may have exit barriers and higher costs.
In addition, if you need immediate liquidity but wish to continue holding your mutual fund investments, you can consider a Fibe Loan Against Mutual Funds. This loan provides a hassle-free way to access up to ₹10 lakhs* instantly by pledging your mutual fund units as collateral. You only need to pay the interest for what you use and enjoy a processing fee of ₹399 or 1.5% of the loan amount, whichever is higher.
The loan also offers interest-only EMIs and disbursal in as little as 10 minutes, making it a quick and efficient option to meet urgent financial needs without having to liquidate your investments.
FAQs
For higher profits, which is better: mutual funds or SIP?
Returns depend more on the performance of the scheme you choose rather than on the investment method. SIPs help you invest regularly while mutual funds manage your money across assets. So they complement each other.
Can I withdraw SIP anytime?
Yes, the flexibility and liquidity of SIPs allow you to redeem your units anytime without exit loads.
Is SIP safer than a mutual fund?
SIP enables disciplined investing to reduce risk over the long term. Mutual fund risk varies by scheme – equity funds carry higher risk while debt funds are relatively safer.
Systematic Investment Plan (SIP) has become one of the most popular investment options among retail investors in India. But is investing in SIP safe? What are the major benefits of SIP investment and potential drawbacks one should be aware of? Let’s find out.
What is an SIP?
A Systematic Investment Plan or SIP allows investors to invest a fixed amount regularly in a mutual fund scheme. SIPs allow investors to invest small amounts periodically, like monthly or quarterly, instead of making a lump-sum investment. The key benefits of SIP include rupee cost averaging, compounding, flexibility and discipline.
Benefits of Investing through SIP
Here are some major SIP benefits that one should consider:
Facilitates Regular Investments
SIP teaches the habit of regular investing by encouraging investors to save and invest small amounts every month or quarter. The fixed SIP instalment can be as low as ₹500 per month, making it an affordable route for retail investors.
Power of Compounding
Compounding is one of the biggest benefits of SIP. Here, the power of compounding works to the advantage, as the earnings from the investments are reinvested to buy more units. Over long periods, this snowballing effect creates wealth.
Rupee Cost Averaging
Investing a fixed amount regularly via SIP allows units to be bought at different NAVs (net asset value). More units are purchased when the NAV falls and fewer units when the NAV rises. This rupee cost averaging helps deal with volatility.
No Need for Market Timing
Trying to time the market is very difficult. SIP investing takes out this need to enter/exit based on market movements. SIP commitments continue irrespective of fluctuations, resulting in earnings over the long term.
Trains in Investing Discipline
SIP investing encourages financial planning and discipline as investors have to compulsorily save and invest the SIP amount every month or quarter. The regular commitment promotes the habit of long-term investing through bull and bear phases.
Flexibility
One of the prominent SIP advantages is that investors can choose to increase, decrease or stop future SIP instalments based on changing financial situations. This flexibility allows one to customise investments to suit income flows.
Drawbacks of SIP Investment
While SIP is a beneficial route for long-term wealth creation, here are some disadvantages of SIP investment that one should consider:
No Control over Timing or Scheme Choice
Investments happen on a fixed date irrespective of market conditions. After starting SIP in a scheme, switching to another option has tax implications, so the choice gets restricted despite changing scenarios.
Longer Investment Horizon Needed
The benefits of SIP investing accrue meaningfully over longer durations of 5 years or more. Impatient investors may be disappointed by the returns in the short term. Temptation to stop SIPs mid-way can take away the advantage.
Inertia with Underperforming Funds
Investors often continue with an underperforming SIP fund due to inertia. Instead of analysing and stopping non-performing SIPs, money keeps getting blocked despite weak returns. This takes away the portfolio upside.
Conclusion: Is it a Good Idea to Invest in SIP
SIP is undoubtedly one of the best investment options for retail investors to accumulate long-term wealth. It inculcates financial discipline, provides flexibility and helps deal with market volatility through rupee cost averaging. Investors just need to choose schemes judiciously, have realistic return expectations over the long term and avoid inertia with underperforming funds.
So, in summary, yes, investing via SIP is reasonably safe for most investors due to the inherent benefits stated above. One just needs to be aware of the importance of long investment horizons and be proactive in portfolio management for optimal returns.
If you ever need liquidity before your SIP investments mature, Fibe Loan Against Mutual Funds offers an excellent solution. With this option, you can access loans starting from ₹15,000* instantly, with interest-only EMIs. The process is hassle-free, and you get disbursement in as little as 10 minutes, enabling you to manage financial needs without affecting your investment growth.
So, plan your financial goals, choose suitable mutual fund schemes for your risk profile and start investing small amounts regularly to grow your hard-earned money safely.
FAQs
Is SIP better than FD?
SIP is a more effective long-term wealth-growth avenue compared to fixed deposits. Though FD offers assured returns, the returns are lower compared to the potentially higher returns from mutual fund SIPs over 5-7 year plus horizons. However, SIP carries some risk that FD doesn’t.
How is SIP beneficial for investors?
SIP allows retail investors to accumulate mutual funds regularly in small amounts. It provides inherent benefits like rupee cost averaging, the power of compounding, and financial discipline and helps reduce risks over the long term. For retail investors, it is the easiest route to reap equity-linked returns.
What is the ideal SIP tenure I should opt for?
Ideally, your SIP tenure should match your financial goal’s time horizon. For example, if you are investing for your child’s higher education 10 years later, ensure your SIP runs for those many years. However, even otherwise, SIP should be continued for a reasonably long duration of 7-10 years to maximise returns through the power of compounding. Avoid very short SIPs of 1-2 years only.
Should I stop my SIP during market downturns?
It is not advisable to stop your SIPs during volatile or downward-moving markets. In fact, market downturns present an opportunity to accelerate your SIPs as more units get accumulated when the NAVs are low. Your rupee cost averaging results in a ‘buying units low’ benefit. Stay invested with continued SIPs during both bull & bear phases rather than timing the markets.
The best SIP mutual funds to invest in India in 2026 are those that match your goal, risk appetite and investment horizon. For a 6–7 year goal, investors can evaluate a mix of Large Cap, Mid Cap, Small Cap, Flexi Cap, Index and Hybrid funds instead of choosing only the highest-return funds.
This list is prepared using broad selection parameters such as 5-year SIP performance, consistency across market cycles, fund category, AUM, expense ratio, risk level, fund strategy and suitability for long-term goals. SIPs are especially useful because they help investors invest regularly without trying to time the market. AMFI defines SIP as a method of investing a fixed amount in a mutual fund scheme at regular intervals, and India’s SIP contribution stood at ₹31,115 crore in April 2026, showing strong retail investor participation.
Disclaimer: The fund names mentioned below are for educational purposes only and should not be treated as financial advice. Mutual fund returns are market-linked and not guaranteed. Please check live NAV, expense ratio, riskometer and scheme documents before investing.
What is SIP (Systematic Investment Plan)?
A Systematic Investment Plan, or SIP, is a way to invest a fixed amount in a mutual fund at regular intervals such as monthly, quarterly or weekly. Instead of investing a large amount at once, SIP allows you to invest smaller amounts regularly.
For example, if you invest ₹5,000 every month in an equity mutual fund for 10 years, your money gets invested across different market levels. When markets fall, your SIP buys more units. When markets rise, it buys fewer units. This helps average your cost over time.
AMFI explains that SIP works like a recurring investment method where the instalment can be as low as ₹500 per month, and in some cases even ₹250 under Chhoti SIP. It also highlights that SIPs help with rupee cost averaging and disciplined investing without worrying about market timing.
Benefits of Investing in the Best SIP Plans
SIP is popular because it makes mutual fund investing simple, disciplined and flexible. Here are the key benefits:
1. Rupee Cost Averaging
SIPs help you buy more mutual fund units when the NAV is low and fewer units when the NAV is high. Over time, this can average out your purchase cost and reduce the pressure of investing at the “right” time.
Example: If your SIP amount is ₹5,000 and the NAV is ₹50, you get 100 units. If the NAV falls to ₹40, you get 125 units. This helps you accumulate more units during market corrections.
2. Power of Compounding
The longer you stay invested, the more time your returns get to generate further returns. This is why SIPs are better suited for long-term goals such as retirement, child education, home buying or wealth creation.
3. Disciplined Investing
SIP builds the habit of investing regularly. Since the amount is auto-debited from your bank account, it reduces the chances of skipping investments due to market fear or spending habits.
4. Flexible Starting Amount
Many SIPs can be started with ₹500 per month. This makes mutual funds accessible for first-time investors, salaried professionals, freelancers and young earners. Groww also notes that SIPs make mutual fund investing accessible and allow investors to begin with smaller amounts.
5. No Need to Time the Market
Market timing is difficult even for experienced investors. SIPs spread your investments across market highs and lows, making them useful for long-term investors who want a systematic approach.
Best SIP Mutual Funds in India 2026
The table below lists 10 SIP mutual funds across major categories that investors can evaluate in 2026. The selection is diversified across large cap, mid cap, small cap, flexi cap, index and hybrid categories instead of focusing only on one high-return segment.
Fund Name
Category
Suitable For
Investment Horizon
Risk Level
Canara Robeco Bluechip Equity Fund
Large Cap
Investors looking for relatively stable equity exposure
5+ years
High
ICICI Prudential Bluechip Fund
Large Cap
Long-term investors seeking large company exposure
5+ years
High
Motilal Oswal Midcap Fund
Mid Cap
Investors comfortable with higher volatility
6–7+ years
Very High
HDFC Mid-Cap Opportunities Fund
Mid Cap
Long-term wealth creation with mid-sized companies
6–7+ years
Very High
Nippon India Small Cap Fund
Small Cap
Aggressive investors with long horizon
7+ years
Very High
Quant Small Cap Fund
Small Cap
High-risk investors seeking small-cap exposure
7+ years
Very High
Parag Parikh Flexi Cap Fund
Flexi Cap
Investors wanting diversified equity allocation
5–7+ years
Very High
HDFC Flexi Cap Fund
Flexi Cap
Investors seeking active allocation across market caps
5–7+ years
Very High
UTI Nifty 50 Index Fund
Index Fund
Investors preferring passive, low-cost investing
5+ years
High
HDFC Balanced Advantage Fund
Hybrid
Investors seeking equity-debt mix with lower volatility than pure equity
3–5+ years
Moderately High to High
ET Money describes its best SIP funds list as schemes that have delivered better SIP returns than peers in the same category and are suitable for long-term investments of 5 years, 10 years or more. Groww also lists SIP mutual funds across categories such as large cap, mid cap, small cap, flexi cap, hybrid and index-oriented options, which helps investors compare funds by category.
Best SIP Funds by Category
Different mutual fund categories serve different investor needs. A beginner may prefer large cap or index funds, while an aggressive investor may evaluate mid cap or small cap funds.
Large Cap SIP Funds
Large cap funds invest mainly in India’s large, established companies. These funds may be suitable for investors who want equity exposure but prefer relatively lower volatility compared to mid and small caps.
Canara Robeco Bluechip Equity Fund, ICICI Prudential Bluechip Fund
Best suited for: 5+ year goals such as wealth creation, child education or retirement planning.
Mid Cap SIP Funds
Mid cap funds invest in medium-sized companies that may have higher growth potential than large caps, but they also carry higher risk.
Fund Type
Who Should Consider It
Example Funds
Mid Cap SIP Funds
Investors with moderate-to-high risk appetite
Motilal Oswal Midcap Fund, HDFC Mid-Cap Opportunities Fund
Best suited for: 6–7+ year goals where the investor can tolerate short-term volatility.
Small Cap SIP Funds
Small cap funds invest in smaller companies. These funds can generate strong long-term returns but can also fall sharply during market corrections.
Fund Type
Who Should Consider It
Example Funds
Small Cap SIP Funds
Aggressive investors with long investment horizon
Nippon India Small Cap Fund, Quant Small Cap Fund
Best suited for: 7+ year goals and investors who do not panic during market downturns.
Flexi Cap SIP Funds
Flexi cap funds can invest across large cap, mid cap and small cap stocks. This gives the fund manager flexibility to shift allocation depending on market conditions.
Fund Type
Who Should Consider It
Example Funds
Flexi Cap SIP Funds
Investors wanting diversified equity exposure
Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund
Best suited for: Investors who want one diversified equity fund instead of choosing separate large, mid and small cap schemes.
Index SIP Funds
Index funds replicate an index such as Nifty 50 or Sensex. They usually have lower expense ratios because they are passively managed.
UTI Nifty 50 Index Fund, HDFC Index Fund Nifty 50 Plan
Best suited for: Investors who want simple, low-cost market participation without depending heavily on active fund management.
Hybrid SIP Funds
Hybrid funds invest in a mix of equity and debt. They may be useful for investors who want growth potential but with relatively lower volatility than pure equity funds.
HDFC Balanced Advantage Fund, ICICI Prudential Equity & Debt Fund
Best suited for: 3–5+ year goals or investors who are not comfortable with full equity exposure.
How to Invest in the Best SIP Mutual Fund?
Investing in SIPs is simple and can be completed online. Here is a step-by-step process:
Step 1: Define Your Financial Goal
Start by identifying why you want to invest. Your goal could be:
Buying a house
Building an emergency corpus
Child’s education
Retirement planning
Long-term wealth creation
Your goal helps decide the fund category. For example, a 2-year goal may not be suitable for equity funds, while a 10-year goal may allow more equity exposure.
Step 2: Assess Your Risk Appetite
Every investor has a different comfort level with risk.
Risk Appetite
Possible Fund Type
Low risk
Debt funds, liquid funds
Moderate risk
Hybrid funds, balanced advantage funds
High risk
Large cap, flexi cap funds
Very high risk
Mid cap, small cap funds
SEBI’s Riskometer helps investors understand scheme risk levels, ranging from low to very high, and allows investors to match a fund’s risk with their own risk appetite.
Step 3: Choose the Right Mutual Fund Category
Pick a category based on your goal and risk profile.
Once KYC is complete, you can invest across different mutual fund houses.
Step 7: Decide SIP Amount and Frequency
Choose an SIP amount that you can continue comfortably. Monthly SIP is the most common option.
Example: If your monthly income is ₹60,000, you may start with ₹3,000–₹6,000 depending on your expenses and goals.
Step 8: Start Your SIP
Set up auto-debit from your bank account and choose the SIP date. Many investors select a date shortly after salary credit.
Step 9: Monitor and Review Periodically
Review your SIP every 6–12 months. Avoid checking daily NAV movements. Make changes only if:
The fund underperforms consistently
Your goal changes
Your risk appetite changes
The fund manager or strategy changes
The portfolio becomes unsuitable
Step 10: Stay Invested for the Long Term
SIPs work best when continued through market ups and downs. Stopping SIPs during market falls can reduce the benefit of rupee cost averaging.
How to Choose the Best SIP Mutual Fund
Choosing the best SIP mutual fund is not about picking the fund with the highest recent return. It is about selecting a scheme that fits your financial goal, risk profile and time horizon.
Key Checks Before Choosing a SIP Fund
Parameter
What to Check
Why It Matters
Past Performance
3-year, 5-year and rolling returns
Shows consistency across cycles
Fund Category
Large cap, mid cap, small cap, flexi cap, hybrid, index
Helps match risk and goal
Expense Ratio
Direct plan vs regular plan cost
Lower cost can improve long-term returns
Riskometer
Low to very high risk rating
Helps avoid unsuitable funds
AUM
Fund size and liquidity
Indicates scale and investor base
Portfolio
Top holdings and sector exposure
Shows concentration risk
Fund Manager
Experience and strategy
Impacts active fund performance
Exit Load
Charges on early withdrawal
Important for liquidity planning
AMFI explains that Total Expense Ratio includes costs such as fund management fees, administration, registrar, custodian and other operating expenses, and that lower TER has a direct bearing on NAV.
Key Factors to Consider Before Investing in SIP Mutual Funds
1. Investment Goals
Before starting an SIP, define the purpose of your investment. A goal gives direction to your fund selection.
5–7 years: Large cap, flexi cap or index funds can be evaluated.
7+ years: Mid cap and small cap exposure may be considered if risk appetite is high.
A goal-based SIP also helps you calculate the amount needed. For example, if you want ₹10 lakh in 7 years, your SIP amount will depend on expected return, current savings and risk profile.
2. Risk Appetite
Risk appetite means how much volatility you can tolerate. Equity funds can fall in the short term, even if they perform well over the long term.
A beginner who gets worried by a 10% fall may not be comfortable with small cap funds. On the other hand, an investor with a 10-year horizon may be able to tolerate volatility better.
Use SEBI’s Riskometer to check whether a scheme is low, moderate, high or very high risk before investing.
3. Mutual Fund Performance
Past performance should be checked, but it should not be the only deciding factor. Instead of looking only at 1-year returns, check:
3-year returns
5-year returns
SIP returns
Rolling returns
Downside performance
Category average comparison
Benchmark comparison
A fund that performs consistently across market cycles may be more suitable than a fund that gives one year of very high returns and then underperforms.
4. Expense Ratio
Expense ratio is the annual cost charged by the mutual fund scheme. Even a small difference in expense ratio can affect long-term returns.
For example, if two similar funds generate 12% gross returns but one has a lower expense ratio, the lower-cost fund may leave more money in the investor’s hands over time.
AMFI states that TER is calculated as a percentage of the scheme’s average NAV and is an important parameter while selecting a mutual fund scheme.
5. Fund Manager Expertise
In actively managed funds, the fund manager plays an important role. A good fund manager can identify opportunities, manage risk and adjust the portfolio based on market conditions.
Check:
Fund manager’s experience
Performance across schemes
Investment style
Consistency during market corrections
Portfolio churn
This is especially important for mid cap, small cap and flexi cap funds.
6. Asset Allocation
Asset allocation means where the fund invests its money. A fund may invest in:
Large cap stocks
Mid cap stocks
Small cap stocks
Debt instruments
Gold
International equities
Sector-specific stocks
For example, a hybrid fund may have both equity and debt, while a small cap fund will mainly invest in smaller companies. Understanding allocation helps you avoid taking more risk than planned.
7. Investment Horizon
Your investment horizon should match the fund type.
Time Horizon
Suitable Fund Type
Less than 1 year
Liquid or ultra-short duration funds
1–3 years
Short-duration debt funds
3–5 years
Hybrid funds
5–7 years
Large cap, flexi cap, index funds
7+ years
Mid cap, small cap funds
Equity SIPs are better suited for long-term goals because markets can be volatile in the short term.
8. Exit Load and Lock-in Period
Exit load is a fee charged if you redeem your mutual fund units before a specified period. Some equity funds charge an exit load if units are redeemed within one year.
Also, some funds such as ELSS have a lock-in period of 3 years. Before investing, check whether you may need the money early.
9. Fund Size (AUM)
AUM stands for Assets Under Management. It shows the total money managed by the scheme.
A very small AUM may indicate limited investor participation, while a very large AUM may sometimes reduce flexibility in certain categories like small cap funds. AUM should not be used alone, but it is useful when checked with performance, liquidity and fund strategy.
10. Consistency Over Rankings
Do not choose a fund only because it is ranked number one on a platform. Rankings can change quickly.
Instead, check whether the fund has:
Consistent rolling returns
Strong downside control
Stable fund management
Reasonable expense ratio
Clear investment strategy
Performance in both rising and falling markets
A consistent fund is often more useful for SIP investors than a fund that performs well only in one market phase.
SIP vs Lump Sum: Which is the Better Way to Invest in Mutual Funds?
Both SIP and lump sum investing can be useful, but they serve different needs.
Choose SIP if you earn monthly income and want disciplined investing.
Choose lump sum if you have surplus money and understand market risk.
Choose a combination if you want to invest a large amount gradually through STP or staggered investments.
For most retail investors, SIP is easier because it reduces emotional decision-making and supports regular investing.
Conclusion
SIPs can be a practical way to build long-term wealth because they encourage regular investing, reduce the need to time the market and help investors benefit from rupee cost averaging. However, the “best SIP mutual fund” depends on your goal, risk appetite and investment horizon.
For a 6–7 years goal, investors may evaluate a diversified mix of large cap, flexi cap, index and hybrid funds, while aggressive investors can consider limited exposure to mid-cap and small cap funds. Avoid choosing funds only by recent returns, especially sectoral or thematic funds, because they can be highly volatile.
If you need liquidity without redeeming your mutual fund investments, you can also explore Fibe Loan Against Mutual Funds. It allows eligible users to borrow against their mutual fund holdings without selling them, helping them stay invested while managing short-term cash needs.
FAQs on Best SIP Plans in India
Which SIP is best for 15 years?
For a 15-year horizon, investors can evaluate diversified equity funds such as flexi cap, large cap, index, mid-cap or small cap funds based on their risk appetite. Beginners may prefer index or large cap funds, while aggressive investors may add mid cap or small cap exposure.
What is the best investment for 2026?
For long-term investors, SIPs in diversified mutual funds can be considered in 2026. The right fund depends on your goal, time horizon and risk profile. Avoid investing only in the highest-return fund of the previous year.
Which SIP funds have low expense ratios?
Index funds generally have lower expense ratios than actively managed funds. Direct plans also usually have lower expense ratios than regular plans. However, investors should compare expense ratio along with performance, risk and consistency.
Can I invest in SIP funds with a small amount?
Yes, many SIPs can be started with ₹500 per month. AMFI also mentions that SIP instalments can be as low as ₹500 and ₹250 under Chhoti SIP.
Which mutual fund is best for SIP for a beginner?
For beginners, large cap funds, index funds or aggressive hybrid funds may be easier to understand than small cap or sectoral funds. These categories offer relatively simpler exposure and may be less volatil than small cap funds.
Is SIP better than FD for long-term wealth creation?
SIP in equity mutual funds can offer higher long-term growth potential than fixed deposits, but it also carries market risk. FDs offer fixed returns and capital stability, while mutual fund SIP returns are not guaranteed. For long-term wealth creation, SIPs may be suitable for investors who can tolerate market fluctuations.
Can I stop or pause my SIP midway?
Yes, most platforms allow you to stop, pause or modify your SIP. However, stopping SIPs during market corrections may reduce the benefit of rupee cost averaging. It is better to review your goal and financial situation before pausing or cancelling an SIP.
Starting a Systematic Investment Plan (SIP) to invest in mutual funds is a straightforward process. But sometimes your situation changes and you need to stop or cancel your SIP. The good news is that closing an SIP is nearly as simple as opening one.
SIP allows you to invest a fixed sum of money into a mutual fund at regular intervals. This can help you develop the discipline to save and take advantage of market ups and downs.
However, a change in your finances may mean you need to pause your future SIP investments. Maybe you lost your job or have already saved the amount you needed. Whatever the reason, putting your SIP on hold is a relatively painless process. This article will walk you through how to stop mutual fund SIP quickly and hassle-free.
Reasons to Stop an SIP
Here are some common reasons why you may need to stop your mutual fund SIP:
Job Loss or Pay Cut: If you have faced a job loss, pay cut or other income disruption, you may need to cut down on expenses. Stopping the SIP is an easy way to reduce monthly cash outflows.
Achieved Life Goal: If you started the SIP to build a corpus for a specific financial goal, like children’s education or retirement, you can discontinue or pause it once the target amount is achieved.
Better Investment Opportunity: You may choose to stop investing in a fund that has consistently underperformed and switch your investment to a better fund.
Change in Risk Appetite: With changing life stages, your financial priorities and risk tolerance levels also change. Review your investments from time to time and stop funds that no longer match your risk profile.
How to Cancel SIP? 3 Ways to Close a Mutual Fund
You can stop your mutual fund SIP through any of these modes:
1. Through Service Request Form
Every fund house provides a service request form to start or stop financial services like SIP. Here is the process to stop your SIP via a physical form:
Download the Common Transaction Form from the AMC website or obtain a physical copy from their branches.
Fill in the form with the folio number, scheme details, SIP start date and your personal information.
In the request column, clearly specify your desire to stop the SIP. Sign the form.
Submit the duly filled form to your nearest AMC branch office or the registrar’s office. Keep a photocopy of the form for future reference.
2. Using Online Facility
Nowadays, most fund houses provide the option to start or stop SIP online via the website or mobile app. Here is how to cancel your SIP online:
Log in to your Mutual Fund account on the AMC website or mobile app
Go to the SIP section and select the ‘stop SIP’ option
Follow the on-screen instructions provided by the AMC platform to initiate the cancellation
Confirm your cancellation request after verifying the SIP cancellation details
Once you place your SIP cancellation request online, you will receive a reference number or confirmation through SMS or email. Do keep those for your records.
3. Through a Designated Bank
If you had registered your SIP through an auto-debit facility with your bank account, you can also submit a request to the bank to stop the auto-debit. Here is the procedure:
Give a written request to your bank to stop the standing instruction of SIP instalment transfer from your account to the fund house. Make sure to mention the AMC name, scheme details, SIP date and amount in your letter.
Your bank will accordingly instruct the fund house on your behalf to stop the SIP.
Once your bank processes the cancellation, SIP debits will stop from the next due date.
How Long Does SIP Cancellation Take?
Once you have submitted your SIP stop request through either of the above modes, how long does it take to reflect in your account?
Ideally, it should stop from the next instalment due date if there is a gap of at least 30 days between your request and the next SIP date.
However, based on your urgency, you can request to stop the SIP immediately or after the next SIP debit. But do keep in mind – immediate SIP cancellation is subject to fund house approval on a case-by-case basis.
Other Things to Note
Here are a few other important things you must keep in mind about stopping your mutual fund SIP:
SIP cancellation is free of cost, and there is no exit load or penalty.
You have to stop your SIP only if you want to stop the periodic investment. Your mutual fund units will continue to exist, and any previously purchased units will remain invested. So your account balance or corpus does not get impacted due to SIP cancellation.
If you have opted for an SIP top-up facility, wherein the SIP amount rises periodically, stopping the SIP will also stop the top-up.
Conclusion
We hope this detailed guide on how to close mutual fund helps you take the necessary action at the appropriate time. Make sure to keep your investment portfolio in sync with your changing financial situation and future goals.
If you find yourself needing funds but don’t want to sell your mutual fund units, consider Fibe Loan Against Mutual Funds. With this option, you can access cash starting from ₹15,000, with amounts going up to ₹10 lakhs. The disbursal process is swift, taking just 10 minutes and you can opt for interest-only EMIs. The loan is based on your mutual fund units, allowing you to maintain your investment while addressing immediate financial needs.
FAQs
Can I stop SIP anytime and withdraw money?
Yes, you can stop your SIP anytime without any charges or penalties. However, to withdraw or redeem existing units in your mutual fund folio, there may be an exit load if you sell before the minimum holding period.
Will I get my money back if I cancel my SIP?
Cancelling your SIP only stops future SIP investments. The units you already hold will remain invested in your mutual fund schemes. You can sell or redeem these if you want the money back. Selling may attract an exit load based on your scheme’s policy.
What is the exit charge for SIP?
There are no exit charges to stop your SIP. You simply stop future debits. To sell existing units, an exit load applies if units are sold before the minimum holding period of the scheme.
Mutual funds are one of the most effective and straightforward ways to build wealth. However, choosing between a Systematic Investment Plan (SIP) and a Lumpsum Investment is a significant decision that buyers often have to make. Both investing techniques offer the same mutual fund plans, but their approach, risk and timing differ.
Learn the difference between SIP and Lumpsum in this in-depth article. Then, you can choose the option that aligns with your financial goals and risk tolerance.
What is SIP?
A Systematic Investment Plan, or SIP, is a method of investing. It allows you to deposit a fixed amount of money into a mutual fund plan on a regular basis, typically once a month or quarterly. The best thing about SIP is that it teaches people how to be smart about their investments and makes mutual funds more accessible. It’s a good choice for beginners and paid people because you can start with as little as ₹500.
What is Lumpsum?
A lumpsum investment means putting a large amount of money into a mutual fund at once. People usually do this when they have extra money, like a bonus, inheritance, or savings. Since you invest the full amount in one go, it’s important to understand market trends and choose the right time to invest.
Key Differences Between SIP vs Lumpsum Investment
Before selecting an investment path, it’s essential to understand the difference between a Systematic Investment Plan (SIP) and a Lump Sum. Here is a side-by-side analysis based on some very important points:
Parameter
SIP
Lumpsum
Investment Style
Regular, fixed contributions
One-time, bulk investment
Market Timing Risk
Low, due to staggered investments
High, as the entire sum is exposed to the market
Entry Barrier
Low – starts from ₹500
Moderate to high – usually ₹1,000+
Cost Averaging
Yes – averages over market ups/downs
No – cost depends on the market at entry
Financial Discipline
Encourages monthly savings
Needs self-discipline
Flexibility
High – can be modified or stopped easily
Low – fixed once invested
Convenience
Automated deductions
Requires lump sum availability
Emotional Bias
Low – consistent investments
High–market emotions can influence timing
Things to Think About Before Making a Choice
Explore the factors to think about before making a decision:
1. Amount of the Investment: A lumpsum investment can be effective if you have a substantial amount of money or receive a bonus. But if you have a steady, small income, SIP is a better way to save.
2. Market Conditions: A lumpsum investment works best when the market declines or corrects itself, but you need to be strategic about it. However, SIP doesn’t depend on timing and helps spread the investment across different market stages, which lowers the risk.
3. Type of Fund: SIPs are safer for risky stock funds because they spread out costs over time. A lumpsum investment may offer better immediate returns in debt or hybrid funds with lower volatility.
4. Risk Tolerance: Investors who prefer not to take risks may opt for SIPs because they allow them to invest gradually. A lumpsum approach may work better for investors who are willing to take on a lot of risk and have a good understanding of how markets work.
SIP: When is It the Right Choice?
SIPs are ideal for:
Systematic Investment Plans (SIPs) need to be considered by individuals whose income comes in the form of a fixed monthly salary.
Investment for Beginners: First-time investors can invest risk-free due to set returns, simple terms and low-risk investments.
Ideal for Savers: Fixed tenures, regular income alternatives, and automatic reinvestment help long-term financial planning and disciplined saving.
Among the other benefits are:
Affordability: When it comes to cost, start with a small amount.
Ease: You don’t have to worry about timing the market.
Compounding Power: Over time, gains on gains lead to exponential growth.
Lumpsum Investment: When Does It Make Sense?
Lumpsum investment is ideal when:
Ideal for Lumpsum Investments: Allows immediate allocation and sustained growth on large amounts.
Strategic Market Entry Timing: Maximises returns by selecting the optimal investment time during favourable market circumstances.
High-Growth Opportunity for Seasoned Investors: Designed for quick cash gains for experienced investors during market upswings.
Summing Up
Both SIP and lumpsum investments can help you build wealth, just in different ways. If you’re someone who prefers steady, smaller contributions every month, SIPs are the way to go. But if you’ve got a chunk of money ready and understand market trends, a lumpsum might offer better growth.
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FAQs
1. Which lumpsum is best for 5 years?
The Quant Small Cap Fund (approximately 49% CAGR), the Nippon India Small Cap Fund (approximately 39%) and the ICICI Prudential Infrastructure Fund (approximately 38%) are the best 5 year lump-sum mutual funds in India.
2. Is it better to invest lumpsum or monthly?
Studies show that investing all at once usually outperforms investing in a planned manner two-thirds of the time. However, investing a fixed amount every month (dollar-cost averaging) lowers the risk of instability.
3. Is it good to invest in lumpsum?
Long-term investors should spend all at once because putting money to work right away often yields higher returns than investing in smaller amounts at different times.
