Who Invented Sip?

Franklin Templeton Mutual Fund first offered mutual fund systematic investment plans, or SIPs, in India in 1993. Investing through SIPs has advanced significantly since that time, based on information provided by the Association of Mutual Funds in India (AMFI). The industry is currently adding about Rs 5,000 crores through SIPs each month, bringing the total SIP book to about 1.32 lakh crores. This indicates that the SIP book for the mutual fund sector will quadruple in another two years.

The report also reveals that during the fiscal year 2016–17, the mutual fund industry added 6.36 lakh SIP accounts on average each month. Additionally, Rs 43,921 Crores were collected through SIPs within the same time frame.

Functioning of SIP

After applying for one or more Systematic Investment Plans, the corresponding investment money is automatically transferred from the investor’s bank account and invested in the mutual funds at the predetermined period. The investor is assigned the units of mutual funds based on the mutual fund’s net asset value.

Every investment made in a Systematic Investment Plan in the nation is accompanied by adding additional units depending on market value into investors’ accounts. The amount of capital reinvested with each investment is significant, as is the return on investment. The investor may choose to get the returns after the Systematic Investment Plan’s term or at predetermined intervals.

How does SIP work?

A SIP is a simple and adaptable investment strategy. Your funds are automatically taken out of your bank account and invested in a particular mutual fund plan. You are given a specific number of units according to the current market rate (also known as the day’s NAV, or net asset value).

Each time you invest, more scheme units are added to your account at the going rate. As a result, investors could take advantage of the power of compounding and rupee-cost averaging by purchasing units at different prices.

Benefits of SIPs

  • The Systematic Investment Plan is in line with the individuals’ financial objectives. Any mutual fund can be chosen as a place to invest, and the duration can be chosen based on personal financial goals and needs.
  • The Systematic Investment Plan’s main benefit is its simplicity of use. One can decide to begin investing in a definite, practical, disciplined, and phase-by-phase fashion. The ease of starting investment might be as low as Rs. 100 every month or as high as the investor desires.
  • Investors can participate in the capital markets through a systematic investment plan without actively predicting the market. The SIP’s advantages can be reaped by allowing investors to buy more units when the price is falling and fewer units when the price is rising. The Rupee Cost Averaging process, this method helps investors lower their average cost per unit of investment.
  • The Systematic Investing Plan is a profitable update to traditional investment strategies, including Public Provident Funds, Fixed Deposits, and other financial instruments. The mutual funds that operate under Systematic Investment Plans have enormous potential to contribute to the steady and low-risk growth of investors’ wealth. Comparing the Systematic Investment Plan to its more established alternatives, it also offers higher returns.
  • Systematic Investment Plans have the potential to shield wealth from a severe market crash since they use the Rupee Cost Averaging technique, as opposed to one-time lump sum investments that result in enormous losses during a market downturn.
  • In times of investor-related financial crises, the Systematic Investment Plan is a lifesaver. The investor may terminate the Systematic Investment Plan at any time. If there is no lock-in term under the plan, the investment may be redeemed at any time.


Because of the power of compounding, SIPs can grow our wealth more quickly the earlier we begin and the longer we invest. However, it’s crucial to pick reputable funds for your SIPs. It would help if you spoke with your financial advisor, who can assist you in choosing high-quality investments that are appropriate for your risk tolerance.

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