Rs. 1.1 trillion have flown into SIPs this financial year | Motilal Oswal

Rupees 1 trillion have flown into SIPs this financial year

If you are looking at investing in a mutual fund scheme or have already invested in one, the concept of systematic investment plan (SIP) is something worth taking a closer look at. SIP investment is a route wherein you can invest at periodic intervals in a mutual fund scheme. 

AMFI data

SIP investment has been widely used by Indian investors; according to data from the Association of Mutual Funds in India (AMFI), inflows via SIP amounted to Rs 1.1 trillion till February in the current fiscal, the highest ever such inflow. In January 2022, SIP investment accounts stood at a little over 50 million, as per AMFI. Further, AMFI data also shows that as of February 2022, there are over 51 million SIP investment accounts, registering a 37 per cent growth when compared to the 38 million SIP accounts that existed in April last year. 

Considering this data, it helps to know why there has been an increase in interest in SIPs among Indian investors. One of the main reasons for an increase in SIP investment is the simplicity of the approach. Indians have traditionally been used to investing or putting away small amounts at regular intervals and this habit has now found an option in SIP. There are several other advantages of investing in a SIP. Below are some of them:

Beating market volatility

One of the biggest advantages of a SIP investment is that it is not impacted by volatility in the market. This means as an investor, you don’t have to be concerned about timing the market. 

Rupee cost averaging

You can invest a certain amount at a regular interval and depending on the market highs or lows, the number of allotted units will vary while the amount remains the same. This concept is called rupee cost averaging and helps an investor participate in many market cycles.

Starting small

With a SIP investment, you can start with a small amount, as low as Rs 500, and this means any investor can take part in mutual fund investing, without worrying about the amount. A SIP also brings in financial discipline as an investor can invest regularly which transforms into substantial savings once the scheme matures. 

Power of compounding

If you invest at regular periods over a longer time horizon, you can benefit from the power of compounding, which is essentially the reinvestment of the periodic returns from the SIP till the plan matures. 

Conclusion

A systematic investment plan helps you participate in mutual fund schemes, even if you wish to start in a small way. It inculcates financial discipline and gets you into the habit of saving. What’s more, you don’t have to worry about timing the market or the highs and lows involved in the same. The concept of SIP has grown in popularity and according to AMFI data, inflows through SIP have hit the Rs 1.1 trillion-mark in the current fiscal, which is the highest ever. 

If you are looking at SIP investment as the way to go, all you need to do is open a demat account online and take steps towards building your portfolio. 

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