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5 types of SIPs And when to choose them
07 Sep 2023

A Systematic Investment Plan (SIP) is one of the easiest and most effective ways to invest in the stock market. Contrary to popular opinion, there are multiple different types of SIPs that you can choose to invest in. Wondering what they are and when to opt for them? Continue reading to find out. That said, before we take a look at the different types of SIPs, let’s quickly visit the concept of an SIP.

What is a Systematic Investment Plan?

A Systematic Investment Plan is basically a method of investment where you’re required to make regular monthly contributions. These contributions are then used to invest in mutual funds online

Now, when you make regular monthly investments through an SIP, you not only leverage the benefit of rupee cost averaging, but also get to enjoy the benefits of compounding as well. It also helps you successfully overcome the negative effects of market volatility and can help you generate long term wealth. 

A major advantage of such an investment plan is that it is extremely flexible. When you start an SIP online, you get to choose the monthly amount that you’re willing to invest in, the tenure, and the kind of mutual funds that you wish to invest in. To put it simply, you can customise almost every single aspect of an SIP to be in line with your needs and requirements. 

What are the different types of SIPs and when to choose them? 

There are around 5 primary types of SIPs that you can invest in - regular SIP, flexible SIP, top-up SIP, trigger SIP, and perpetual SIP. Let’s take a more in depth look at each type and get to know them better. 

1. Regular SIP

As the name itself signifies, a regular SIP is the most simplest form of a Systematic Investment Plan. Under this plan, you’re required to make contributions at regular intervals, which can be monthly, bi-monthly, quarterly, or half-yearly. The contributions that you make are then invested in mutual funds of your choice. When you open this SIP online, you’re given the option to choose the tenure, the contribution amount, and the frequency. However, once you’ve chosen the contribution amount, you cannot change it at a later point in time.    

When to choose this type of SIP?

If you’re just starting out on your stock market journey, you can opt to invest in a regular SIP. Alternatively, if you’re clear with your investment tenure and your financial goals, opting to invest in such an SIP may just be the perfect choice.

2. Flexible SIP   

Also known as flexi SIP, a flexible Systematic Investment Plan is very similar to a regular SIP. However, the only difference between the two is with the investment amount. In a flexi plan, you can adjust or change the amount of contribution that you wish to make towards it at any point in time. By allowing you to change the investment amount, flexi SIPs give you a greater degree of control over your investments than a regular plan. 

When to choose this type of SIP

If you prefer to have a greater control over the SIP by being able to adjust your investment in accordance with the market movement, then investing in a flexible SIP may just be a good idea. For instance, you can increase your contribution when the markets are performing well and decrease it when the markets are falling. 

Alternatively, if you don’t have a steady source of income or are prone to financial crunches from time to time, then a flexible SIP may just be the perfect option for you. It allows you to lower or increase the amount depending on your current financial situation. 

3. Top-up SIP

Also known as step-up SIP, this type of a Systematic Investment Plan allows you to increase your contributions at certain predetermined intervals. 

For instance, with a top-up SIP, you can start by investing Rs. 5,000 each month and put in an instruction to the fund house to increase the amount of contribution by Rs. 1,000 every six months till the end of the tenure. 

So, in the first six months of the SIP, you will be contributing Rs. 5,000 each month and for the next six months, you will be contributing Rs. 6,000 every month. This goes on till the end of the SIP tenure. 

When to choose this type of SIP?  

A top-up SIP is the perfect option for salaried individuals getting regular yearly or half-yearly increments. This allows you to automatically increase the SIP contributions in line with your salary hike without you having to manually intervene in any way. 

Also, step-up Systematic Investment Plans may be a good option for individuals who have just started working as well. You could start with a small investment amount and increase it slowly every single year as and when you receive an increment.

4. Trigger SIP   

A trigger Systematic Investment Plans only invest in a mutual fund online if a designated event occurs. This designated event can be anything from favourable market movements, an index level, or even an NAV level. For instance, you could set up a trigger SIP to start investing only if the NAV level of a mutual fund falls below a particular level.

When to choose this type of SIP?   

Trigger SIPs require exceptional levels of market awareness and knowledge on market dynamics. Therefore, you should opt for this kind of Systematic Investment Plans only when you’ve gained enough knowledge and expertise on the stock market.  

5. Perpetual SIP 

As the name itself signifies, a perpetual SIP has no fixed tenure at all. The investment plan continues as long as the individual keeps contributing at regular intervals. It only ceases when the investor provides a stop instruction to the fund house. Apart from this single point, there’s not much of a difference between perpetual SIP and a regular plan. 

When to choose this type of SIP?

If as an investor, you don’t have any specific goal or tenure in mind, choosing a perpetual SIP may be the right choice. It allows you to stay invested as long as you wish and gives you the power to redeem your investments when you see fit.  


With this, you must now be aware of the 5 main types of SIPs and when to choose them. If you wish to open an SIP online, then it is important to make sure to first have a demat account. If you don’t have one already, you can simply open a demat account by getting in touch with Motilal Oswal. It hardly takes a few minutes to complete and is free as well. 

Related Articles: Investing in Mutual Funds is Now Easy with MO Investor App | Invest In Mutual Funds Online In 5 Simple Steps |  How to Analyse Mutual Funds for Big Returns 


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