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Systematic Investment Plan or SIP is a smart and hassle free way to invest money in mutual funds with certain pre-determined amount at regular intervals (monthly, quarterly etc.). It is designed to help investors save regularly and thus accumulate wealth in a disciplined manner over long-term.

What is SIP?

SIP investment or systematic Investment Plan is a facility to invest in mutual funds where you can invest relatively small amounts at regular intervals. Through SIP investment you can invest a fixed amount in any open ended mutual fund scheme of your choice at intervals chosen by you (e.g. daily, weekly, fortnightly, monthly etc.). SIP plans are preferred by investors because they can start investing in mutual funds with relatively small amounts. Since the amounts invested are relatively smaller than lumpsum investments, the risk in SIP mutual fund is also relatively lower.

Mutual fund SIP plans were first introduced in India in the late 1990s. Over the last two decades SIP mutual fund have grown tremendously in popularity among retail investors. As per AMFI data, there are 5.17 crores SIP accounts (as on 28th February 2022). More than Rs 10,000 crores is invested through mutual fund SIP plans . In FY 2021-22, more than Rs 1.1 lakh crores has already been invested through systematic investment plan (as on 28th February 2022).

Assets under Management in mutual fund SIPs are relatively stickier assets, since investors usually do not redeem their SIP investment in volatile markets. SIP mutual fund is also a great way of building long term wealth because one invest over long horizons and benefit from the power of compounding. The chart below shows the growth of Rs 10,000 investments in Nifty 50 TRI through SIP investment over the last 20 years (ending 28th February 2022). With a cumulative investment of Rs 24 lakhs over the last 20 years, you could have accumulated a corpus of Rs 1.3 crores by investing through systematic investment plans.

Arbitrage llustration
Source: National Stock Exchange.Period: 01.03.2002 to 28.02.2022.Disclaimer: Past performance may or may not be sustained in the future.

How does SIP work?

  • On the SIP investment date, the SIP amount (specified by you) gets auto-debited from your savings bank account and gets invested in the mutual fund scheme of your choice.
  • The AMC allots units of the mutual fund scheme to you based on the SIP amount and the prevailing Net Asset Value (NAVs).
  • You should have sufficient balance in your bank account on the SIP date. If your available savings bank balance, subject to minimum balance rules, is less than the SIP amount, then your SIP transaction will fail.
  • While there is no penalty for insufficient funds, your Systematic Investment Plan will get cancelled, if the transaction fails for three consecutive months due to insufficient funds. You will then have to restart the SIP mutual fund .
  • You can redeem units of your SIP investment (except in schemes with lock-in periods e.g. ELSS funds) at any time. Redemptions made within the exit load period will attract charges depending on the exit load structure.
  • Through SIP plans you buy units of your mutual funds scheme at different NAVs. By investing in SIPs you can take advantage of Rupee Cost Averaging (RCA) of the acquisition cost of your mutual fund units. We will explain how Rupee Cost Averaging works in the next section.
Arbitrage llustration
Source: National Stock Exchange. Period: 01.03.2002 to 28.02.2022. Disclaimer: Past performance may or may not be sustained in the future.

How does Rupee Cost Averaging work in SIP plans?

In Rupee Cost Averaging you invest fixed amounts at regular intervals (e.g. weekly, monthly, quarterly etc). The simplest mantra of stock market investing is “buy low, sell high”. But it is easier said than done, because timing the market is extremely difficult. Warren Buffet said that greed and fear influences investor behaviour when you try to time the market; often you may end up buying high, selling low.


Through SIP investment you invest fixed amounts of money at regular intervals, you buy less number of units when the NAV (price) is higher and more number of units of your mutual fund scheme when the NAV (price) is lower. The table below illustrates how Rupee Cost Averaging works in mutual fund Systematic Investment Plan (monthly SIP plan of Rs 10,000) in Nifty 50 TRI in 2020. Over sufficiently long investment tenures, investors can profit from volatility through Rupee Cost Averaging.

How to invest in SIP?

  • Investors should note that, they should be Know Your Client (KYC) compliant to invest in mutual funds. If you are an existing mutual fund investor, you can check your KYC status online by entering your Permanent Account Number (PAN) on the depositary portals (e.g. CDSL) or the portals of the Registrar and Transfer Agents (RTAs).
  • If you are a new investor or not KYC compliant, you need to submit your KYC documents (e.g. PAN card, Aadhaar Card etc) to the Asset Management Company (AMC) or the Registrar and Transfer Agents (RTA) of the AMC. You can complete your KYC process online or take the help of a financial advisor if required. Once you are KYC compliant you can start investing in SIP investment plans .
  • Investors should also know that they need to have a bank account where they are the primary or joint account holder to invest in SIP mutual fund . SIP investment can also be started with the joint bank account holder on anyone or survivor basis or joint holder basis.
  • To invest in mutual fund SIP , you first need to select a mutual fund scheme where you want to invest. You can invest in any open ended mutual fund scheme e.g. equity funds, hybrid funds, debt funds etc. You should select a mutual fund scheme and option (e.g. growth, IDCW) according to your risk appetite and investment goals. You should take the help of a mutual fund distributor or financial advisor if you want to understand your risk appetite and the risk profile of the scheme.
  • To invest through SIP plans , you need to register for Systematic Investment Plan by submitting a bank Electronic Clearing Services (ECS) mandate where you have to specify the SIP amount, the interval and the SIP date. Through the ECS mandate, you instruct the bank to debit a certain amount at the specified date(s) of a month and credit to the mutual fund. The ECS mandate can be submitted online or through a paper form to the AMC or RTA.

Benefits of investing in SIP

  • You can make SIP investments with relatively small amounts (Rs 500 or Rs 1,000) from your regular savings. In case of ELSS funds, it is only Rs 500.
  • You can start SIP investment early in your working careers and invest for long tenures to get benefits of compounding.
  • SIP mutual fund helps you remain disciplined in your financial plan. It makes market timing irrelevant since you are investing at different price (NAV) levels.
  • Since you are investing relatively small amounts through SIP mutual fund , the risk is lower compared to lump sum investments where you commit relatively larger sums of money.
  • By investing your savings on a regular basis, you are putting your savings to work to earn higher returns over the investment tenure, instead of keeping them idle in your savings bank or spending it on some discretionary item.
  • The longer you remain invested, higher is the potential return and wealth creation. In SIP plans , over long investment tenures you can leverage the power of compounding. In mutual funds (growth option), the profits made by the scheme are re-invested in the scheme, just like how interest accrued is added to the principal in compound interest. Essentially, you earn profit on profits by re-investing the profits – this is the power of compounding. Longer the investment tenure, higher is the power of compounding (refer to the wealth creation example of investing in Nifty through SIP ).
  • By investing at a regular frequency, SIP investment can take advantage of market volatility by averaging the cost of the investment. Rupee Cost Averaging can lower the cost of acquisition of units in volatile or bear markets.
  • SIP investments are ideal for meeting your long term financial goals e.g. children’s higher education, children’s marriage, retirement planning, wealth creation etc, since you can start early, have long investment horizons and benefit from the power of compounding.

Benefits of SIP:

Systematic Investment Plan (SIP) is a smart financial planning tool that helps you build wealth, step by step, over a period of time. Key benefits of SIP are:

s1

Lower cost through Rupee cost averaging

SIP saves you from timing the market because by investing fixed sums at regular intervals, you have the advantage of picking up more units when the prices are low and less units when the prices are high. Therefore, SIP can bring down the average cost of your units. Click here to view details.

s2

Aims to generate wealth through the compounding effect

Investing regularly for a long period of time may help you accumulate a sizeable corpus through power of compounding effect.

s3

Reduce the volatility of returns

It inculcates disciplined approach towards financial savings rather than ad hoc investment decisions.

Time in the market via SIP addresses your worry of timing the market by smoothing the investor return cost averaging.

ANY DATE SIP

Systematic Investment Plan (SIP) is a smart and hassle free way to invest money in mutual funds with certain pre-determined amount at a regular interval (monthly, quarterly etc.). It is designed to help investors save regularly and thus accumulate wealth in a disciplined manner over long-term. However, existing SIP allows investor only restricted date range to invest through SIP for example every 1st, 15th, 30th or etc. This makes investors to plan their expenses and investment aligned to the SIP date range.

"ANY DATE SIP" provides one of the better investment experiences by allowing the investor to choose any investment date of the month depending upon the investors’ expense and income flow. Click here to know more

Example

One good rule to make saving is to keep the investment date close to your income/salary date, so that you can save before you spend. If your salary date is every 15th of month, in any date SIP, you can set SIP date 16th and easily save your salary before you spend!

SIP date even can be set up to your lucky number like every 7th, 3rd or whenever

Investment Date Strategy

*Note: In case, the instalment date chosen in the current or subsequent month is a non-business day or is not available, the instalment will be applied on the next business day.

*Please read the offer documents to know in details about this facility

Frequently Asked Questions

Answer: 战雄电竞 SIP is not a safe investment. Mutual funds are subject to market risks. Your SIP investment may give negative returns even over 2 – 3 year investment tenures depending on market conditions. Different mutual fund schemes have different risk profiles. You should select a scheme according to your risk appetite and investment needs. SIPs are usually recommended for long investment tenures. You should consult with your financial advisor if you need help in making investment decisions.

Answer: Bank Fixed Deposits give you guaranteed returns (based on the applicable interest rate of the FD) with principal protection subject to solvency to the bank itself. Mutual funds give no assurance of returns or even capital protection. You should be aware of the risks before investing through SIP investment . You should invest according to your risk appetite and investment goals.

Answer: Yes, you can start your mutual fund SIP with just Rs 500 investment. Consult with your mutual fund distributor who can help you to know, which AMCs offer SIP plans starting with Rs 500. However, SIP investment or even lumpsum in ELSS mutual funds can be started with Rs 500.

Answer: You can withdraw or redeem your SIP investment (except SIPs in ELSS funds) partially or fully anytime. However, your SIP withdrawals or redemptions may be subject to exit loads, if withdrawals or redemptions are made within the exit load period. You should refer to the Scheme Information Document (SID) to know the exit load structure of your scheme. As far as Equity Linked Savings Scheme (ELSS) is concerned, these mutual fund schemes have a lock-in period of 3 years. If you are investing in ELSS through SIP, each SIP instalment will be locked in for 3 years from the instalment date.

Answer: Redemptions in SIPs may not be tax free. Taxation of redemptions in mutual SIPs depends on the type of the scheme and when redemptions are made. In SIP investment , the principle of First in First Out (FIFO) applies for taxation; you should consult with your tax consultant or chartered accountant to understand how FIFO will be applied for taxation of redemption proceeds in SIPs.

Taxation of redemption proceeds in SIP mutual fund also depends if the scheme is an equity fund or non equity fund; consult with your financial advisor to know which funds are treated as equity or non equity funds for taxation purposes. Short term capital gains in equity funds are taxed at 15%, while long term capital gains up to Rs 1 lakh is tax free in a financial year and taxed at 10% thereafter. Short term capital gains in non equity funds are taxed as per your income tax rate, while long term capital gains are taxed at 20% after allowing for indexation benefits. If you are investing in IDCW (dividend) options through SIP investment , then IDCW (dividend) payments will be taxed as per your income tax rate, both for equity and non-equity funds.

ELIGIBLE SCHEMES FOR SIP

Type

Name of Scheme

Eligibility

Equity

Mirae Asset Banking and Financial Services Fund

Yes

Mirae Asset Emerging Blue Chip Fund

Yes

Mirae Asset Focused Fund

Yes

Mirae Asset Great Consumer Fund

Yes

Mirae Asset Healthcare Fund

Yes

Mirae Asset Large Cap Fund

Yes

Mirae Asset Midcap Fund

Yes

Mirae Asset Tax Saver Fund

Yes

Balanced

Mirae Asset Arbitrage Fund

Yes

Mirae Asset Equity Savings Fund

Yes

Mirae Asset Hybrid Equity Fund

Yes

Debt

Mirae Asset Banking and PSU Debt Fund

Yes

Mirae Asset Cash Management Fund

Yes

Mirae Asset Corporate Bond Fund

Yes

Mirae Asset Dynamic Bond Fund

Yes

Mirae Asset Money Market Fund

Yes

Mirae Asset Overnight Fund

Yes

Mirae Asset Savings Fund

Yes

Mirae Asset Short Term Fund

Yes

Mirae Asset Ultra Short Duration Fund

Yes

ETF

MIRAE ASSET ESG SECTOR LEADERS ETF

No

MIRAE ASSET HANG SENG TECH ETF

No

MIRAE ASSET NYSE FANG+ ETF

No

Mirae Asset S&P 500 TOP 50 ETF

No

Mirae Asset Nifty 50 ETF (MAN50ETF)

No

Mirae Asset Nifty Financial Services ETF

No

MMirae Asset Nifty India Manufacturing ETF

No

Mirae Asset Nifty Midcap 150 ETF

No

Mirae Asset Nifty Next 50 ETF (MANXT50ETF)

No

FOF

MIRAE ASSET HANG SENG TECH ETF FUND OF FUND

No

Mirae Asset NYSE FANG+ETF Fund of Fund

No

Mirae Asset S&P 500 TOP 50 ETF Fund of Fund

No

Mirae Asset ESG Sector Leaders Fund Of Fund

Yes

Mirae Asset Equity Allocator Fund of Fund

Yes

Mirae Asset Nifty India Manufacturing ETF Fund of Fund

Yes

Index

Mirae Asset Nifty SDL Jun 2027 Index Fund

Yes

     

*Each installment will be locked in for 3 years

For the list of schemes which are eligible for this facility and other terms and conditions, please refer to the facility form.

Mirae Asset Presents Any Date SIP

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