SIP

A systematic investment plan buys units of a fund on a set date, every month or at another chosen interval, for an amount you fix. The money is taken from your bank account under a one-time mandate, through e-NACH or UPI AutoPay.

Each instalment buys units at that day's NAV. When the NAV is low, the same amount buys more units; when it is high, fewer. ₹5,000 buys 100 units at an NAV of ₹50, and about 83 units at ₹60. Over time your average cost per unit ends up below the average of the NAVs you bought at, an effect called rupee cost averaging.

• Each instalment is a separate purchase. It has its own date for exit load, for tax and for the three-year ELSS lock-in.
• Each fund sets its own minimum, usually between ₹100 and ₹1,000 a month.
• You can stop a SIP at any time, and many fund houses allow a pause. Stopping does not sell the units you hold.
• The return is measured with XIRR, since every instalment has been invested for a different length of time. See XIRR.

The SIP calculator shows what a monthly amount could grow to at a chosen return.