Why to Invest in SIP: Top 10 Reasons Why SIP Is The Best Investment

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  • 05 Oct 2023
Why to Invest in SIP: Top 10 Reasons Why SIP Is The Best Investment

Key Highlights

  • SIP is a systematic investment where you add a small amount to a particular fund to get returns over a long-term investment.

  • It offers a disciplined way to invest in the share market.

  • Through SIP mutual funds investors get relief from deep research or technical aspects of investing.

In this article, let's explore the top 10 reasons why SIP Investment is the best way to invest. Here are the 10 points on why SIP is the best way to invest in stock markets, with each reason explained more descriptively:

1. Inculcates Financial Discipline Investing through SIP gives financial discipline to the investor as it requires setting aside a fixed amount regularly at specific intervals. This auto-deduction system enforces savings habits and ensures one keeps investing consistently without bothering about market volatility and other factors.

2. Rupee Cost Averaging SIP allows investors to buy more units when the price falls and fewer units when the price of assets rises. This averages out the purchase cost and reduces risk through rupee cost averaging. It automatically calibrates investments to market levels and therefore balances the overall portfolio.

3. Removes Emotional Biases There are no emotional decisions taken when an SIP investment. You can therefore say that SIP is a good type of investment, as there are no emotional decisions made by the investor or the fund manager. Fixed automated investing through SIP takes away the temptation of trying to time the market as per the current conditions and making any impulsive decisions based on greed in bull runs or fear in downturns. Therefore, simultaneously It enforces a long-term approach.

4. Benefits from Long-Term Growth SIP investment ensures continued exposure to equity markets through the ups and downs of the stock market. This facilitates participation in long-term trade, whether it's uptrends and or compounding gains over time. Equity SIP gains exceed fixed-income returns over the long run.

5. Low Investment Investors are happy when they get the option to start with a low investment. A SIP involves investing small preset amounts periodically, starting as low as ₹100 or ₹500 per month or even. This makes it easy for retail investors and young earners new to markets to begin investing in different types of stock markets.

6. Auto-Pilot Mode Your Investment You don't need to keep a reminder for your SIP instalments. SIP can easily get deducted from your registered bank account eliminating the need for manual intervention after initial set up. This takes away the hassle of remembering to make lump-sum investments.

7. Flexibility on Investment With this mutual funds investment duration can be altered based on changes in income, expenses or the investor's life stage. This adaptability helps you to change the amount of your SIP, and alter or even close your investment.

8. Diversification Options Investors can choose from a variety of SIP-eligible funds across market caps and sectors based on their financial goals, time horizon and risk tolerance. This allows for constructing a diversified portfolio without any trouble of research, analysis & tracking of different stock market instruments.

9. Creates a Huge investment With consistent investment in mutual funds through SIP you get an opportunity to create a wealth basket of investments. This allows the creation of a sizable corpus even with modest regular investments that get compounded over long periods. This helps achieve goals which may not be possible with other types of investments.

10. Tax Efficient Mutual funds are considered a tax-efficient investment compared to any other instruments in India. The tax treatment depends on the type of mutual fund and the holding period. For equity mutual funds, if units are held for more than 12 months, any gains over Rs 1 lakh are taxed at 10% long-term capital gains tax. Gains up to Rs 1 lakh are tax-free. For debt mutual funds, if units are held for over 36 months, long-term capital gains are taxed at 20% after indexation benefit. For less than 36 months, gains are added to income and taxed as per slab.

In India’s leading AMCs and other financial firms allow investors to manage their mutual fund investments online using their own portal or their Demat account. You can monitor your SIPs, start new SIPs, stop SIPs, do STPs or SWPs to a different scheme, and even redeem your mutual fund investments units from the investment app such as Kotak Securities. Considering sip is best investment or not depends solely on your research & risk appetite.


Systematic Investment Plans provide a structured approach to equity investing for different types of investors through periodic automatic deductions. By following discipline of invesThe low ticket size, automatic mode, flexibility, diversification and tax efficiency make it a simple, hassle-free method suitable for all types of investors.

With the SIP it allows investors to create wealth based on the immense growth potential of stock markets. You can simply use Kotak Securities to browse different mutual funds & start your SIP investment and if you have clear your concept that sip is a best investment or not for your investment portfolio.

FAQs on SIP Investments

In SIP, you can simply invest a set amount periodically (monthly, quarterly etc.) for purchasing units of a mutual fund scheme.

The minimum SIP amount varies across mutual fund schemes but it usually ranges from Rs. 500 to Rs.1000 per month.

You can start a SIP either online or offline by submitting a form and NACH mandate along with KYC documents to your broker or mutual funds provider & selecting the amount and the bank where you want to debit your monthly SIPs

Ideally, SIP should be continued for medium to long-term periods like 5-10 years to realize its full potential.

You can discontinue your SIP if your financial situation changes or you have achieved your target.

Yes, you can increase, decrease or stop your monthly SIP instalment amount whenever you want.

You can easily track your SIP value, returns, worth etc. using your mutual fund account statements or Demat apps.

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