Make investing a habit with SIPs
Starting an SIP early provides you the benifits of compounding and
helps you in achieving your financial goal
SIP - Systematic Investment Plan
Systematic Investment Plan (SIP) is a way of investing in mutual funds through which an investor can invest a fixed amount in mutual fund of his/her choice at regular intervals.
Like a Recurring Deposit, an investor can invest fixed amount at regular intervals (monthly or quarterly) through SIP. Rather than investing a large amount one-time through lump sum mode, more investors now prefer to invest smaller amounts regularly through the SIP mode. You can start investing through SIP in a mutual fund with an amount as low as Rs 100 per month.
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Benefits of Investing in SIP
- Promotes disciplined and consistent investing
- Averages costs in volatile markets
- Enables compounding for wealth growth
- Minimizes risk of market timing
- Provides flexibility to adjust investments
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Once you apply for one or more SIP plans, the amount is automatically debited from your bank account and invested in the mutual funds you have purchased at the predetermined time interval.
At the end of the day, you will be allocated the units of mutual funds depending on the NAV of the mutual fund.
With every investment in an SIP plan in India, the additional units are added to your account depending on the market rate. With every investment, the amount being reinvested is larger and so is the return on those investments.
It is at the discretion of the investor to receive the returns at the end of the SIP’s tenure or at a periodic interval.
Let us understand with an example
Suppose you want to invest in a mutual fund and you have set aside a sum of 1 Lakh Rupees to invest in the same. Now there are two ways in which you can make this investment.
Either you can make a one time payment of Rs 1 Lakh in the mutual fund, also known as lump sum investment. Or you can choose to invest via Systematic Investment Plan or SIP.
You need to start an SIP of a set amount. Say Rs 500. Then Rs 500 will be deducted from your account and auto credited to the mutual fund you want to invest in, at a certain fixed date every month. This will continue till the time period.
- Easy on pockets – Investment through a SIP is possible with small amounts. You can start investing through a SIP with amount as low as Rs 500 per month or in case of certain schemes with Rs 100 per month.
- Disciplined approach in investing - SIPs inculcate saving habit & discipline in investments by making you invest on a regular basis.
- Do away with the need to time the market - By investing through a SIP, you do away with the worry of timing the market. Timing the market means looking at the right / lower level of market to start investing.
- Benefit from power of compounding over long term - With smaller amounts to invest through SIPs, you can start investing early. This gives the invested amount more time in the market which increases the probability of higher returns
Mutual Fund is a regulated by SEBI. ICICI Securities Limited is an AMFI Registered Mutual Fund Distributor with Reg. No.: ARN-0845.
ICICI Securities Limited is just acting as distributor and all disputes with respect to such distribution activity, would not have access to SCORES/ODR, Exchange investor redressal forum or Arbitration mechanism.
* Funds that are allocated for trading do not leave the saving account of the customer, hence they are eligible for earning interest as per the savings bank rate.
** Thomson Reuters - Analyst Awards (Awarded to ICICI Direct research analysts) : 2011-12, 2014, 2015, 2017
*Please note Brokerage would not exceed the SEBI prescribed limit.