If you have started making investments in mutual funds, you will be tempted to invest in lumpsum. Most wealth advisors, meanwhile, would tell you to go slow and go systematically.
This is simply because it is quite convenient to invest in mutual funds via systematic investment plans (SIPs).
For the past 14 consecutive months, overall SIP inflow has been rising month after month, reveals the data released by the Association of Mutual Funds in India (AMFI). As on Aug 31, mutual fund SIP accounts stood at 9.61 crore and the total amount collected through SIP during August 2024 was ₹23,547 crore.
| Month | SIP ( ₹crore) |
| April | 20,371 |
| May | 20,904 |
| June | 21,262 |
| July | 23,332 |
| Aug | 23,547 |
(Source: AMFI)
Have you ever wondered how much wealth you stand to create if you were consistent in investing ₹10,000 over a long period of time.
A humble investment of ₹10,000 over 5 years can grow to ₹8.25 lakh when it rises at the rate of 12 percent per annum. Over a period of 10 years, the same consistent investment of ₹10,000 swells to ₹12 lakh.
Over a 15-year period, you can accumulate ₹50.46 lakh by investing ₹18 lakh, and over 20 years, this becomes almost ₹one crore while the total investment is ₹24 lakh only.
| Tenure | Investment | Corpus |
| 5 years | 6 lakh | 8.25 lakh |
| 10 years | 12 lakh | 23.23 lakh |
| 15 years | 18 lakh | 50.46 lakh |
| 20 years | 24 lakh | 99.9 lakh |
So, as one can see, the growing faith in the SIPs is not a coincidence or a fluke. It, in fact, stems from a range of benefits offered by the SIPs. Here we share some of the key benefits of investing in mutual funds via systematic investment plans (SIPs):
Key advantages of investing in mutual funds via SIPs:
1. Rupee cost averaging: When you invest via SIPs, you get to buy units at different price points which help you maximise your gains at the time of redemption. Conversely, when you buy units at a high price, the probability of maximising the value at the time of redemption may fall if the units were bought at the time of bull run.
2. Convenient to invest: Investing in mutual funds via SIPs is far more convenient than investing in lumpsum. You can simply put your account on an auto invest so that a regular investment of (say) ₹500 or ₹1,000 is made every week/ month/ quarter.
3. Easy to cough up small units: When you invest in the small units of a mutual fund, it is considered far more convenient instead of investing huge sums in one instalments. For example, investing ₹10,000 a month is far easier than investing ₹1.2 lakh at the start of the year.
4. Investing discipline: Accumulating large sums of money requires discipline. Merely by being disciplined, you can create a huge corpus so long as you do it over a long period of time.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.
