SIP contributions grow to Rs.1.5 lakh crores increasing by 31% YoY. Know the reasons why

31% growth in SIP investments

growth in SIP investments

Systematic Investment Plans (SIPs) are a mode of investing in mutual funds wherein you can invest small amounts at regular intervals and save in a disciplined manner. SIPs also have various other benefits, making it a popular investment choice among investors.

In 2022, despite the short-term volatility in the market, SIP contributions saw a jump. The contributions jumped 31% compared to 2021, reaching Rs.1.5 lakh crores. Retail investors boosted this growth as they remained confident in continuing their SIPs. Here’s how SIP contributions grew in the last few years –

SIP contributions

The road ahead

Even in 2023, SIP investments are expected to remain strong and grow. Here are some reasons why –

  • New investors

Investors are moving from traditional investments to financial ones. Moreover, Tier 2 and 3 city investors are gradually moving towards mutual funds through the SIP route. Investors new to the mutual fund segment prefer to start with SIPs to test the waters. All these factors combine to give an impetus to SIP contributions on an aggregate basis.

  • Rupee-cost averaging

With SIPs, you get the benefit of rupee-cost averaging. This means that the effective NAV of buying the units gets averaged out. SIPs allow you to buy more units in the case of falling markets, and in rising markets, the units are reduced. Thus, the falling and rising markets average out, giving you optimal units.

  • Affordability 

Investing in SIPs is affordable. You can start from as low as Rs.500 per month. This also makes SIPs popular among investors who don’t mind saving small amounts every month to build a corpus for their financial goals.

Moreover, SIP investments can be made weekly, bi-weekly, monthly, and in other frequencies allowing investors to choose a frequency that suits their investment strategy.

  • No need to time the market

With SIPs, the investment is automated. You don’t have to time the market when investing or redeeming. Since the concept of rupee-cost averaging works, you can invest even in falling markets and benefit from the averaging concept.

  • Disciplined investing

SIPs also allow investors to save in a disciplined manner. This creates a saving habit and goes a long way in creating a suitable corpus for their financial goals.

Related - Know how to build an Rs.100 crore corpus with a monthly SIP of Rs.25,000

The bottom line

Over the years, the popularity of SIPs has grown tremendously as investors increasingly become aware of mutual fund investing. So, if you have a SIP, continue your investment or step it up to create a good corpus for your goals. If you haven’t invested in a SIP yet, it's time to start investing to capitalize on the benefits of the investment mode.

Related- Find out what to do with the maturity amount of your SIP.

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