Systematic Investment Plan (SIP)
A way to invest a fixed amount in a mutual fund at regular intervals.
Definition
A Systematic Investment Plan (SIP) lets you invest a fixed amount in a mutual fund scheme at regular intervals — usually monthly. It builds discipline, averages your purchase cost across market ups and downs (rupee-cost averaging), and harnesses compounding over the long term.
Formula
FV = P × [ ((1 + i)^n − 1) / i ] × (1 + i) — where P = monthly amount, i = monthly return, n = number of months Example
Investing ₹10,000/month for 15 years at an assumed 12% p.a. grows to roughly ₹50 lakh, of which ₹18 lakh is your contribution and the rest is compounding.
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