Reviewed 2 October 2026. A Systematic Investment Plan lets you invest periodically in a mutual fund. The schedule makes regular investing convenient, but the fund’s value can rise or fall.
How each instalment buys units
For a simplified illustration, ignore transaction deductions and assume ₹2,000 is invested when the applicable NAV is ₹20. You receive 100 units. A second ₹2,000 investment at a NAV of ₹25 buys 80 units. You have invested ₹4,000 and hold 180 units, with an average purchase cost of about ₹22.22 per unit.
If the later NAV is ₹21, those units are worth ₹3,780, before redemption costs or taxes: ₹220 below the amount invested. Buying regularly has not prevented a loss.
What rupee cost averaging does
A fixed contribution buys more units at a lower NAV and fewer at a higher NAV. It does not mean the average cost will always be low, or that every market decline is an opportunity suitable for you. The result depends on the full path of prices and when you eventually redeem.
Starting a SIP
- Choose a goal and a fund whose investment risks you understand.
- Check the scheme’s current minimum amount and available dates.
- Complete the applicable investor verification process through an authorised channel.
- Confirm the scheme, plan and option before registering the payment instruction.
- Leave enough bank balance and verify unit allotments on your statements.
Payment processing and the applicable NAV depend on transaction rules; the calendar debit date alone does not guarantee a particular purchase NAV.
What a SIP calculator estimates
₹5,000 per month for ten years means ₹6 lakh contributed. At a constant assumed 8% annual rate divided by twelve and compounded monthly, with deposits at month-end, the illustration ends at about ₹9.15 lakh. The calculator models a smooth return; actual mutual fund NAVs fluctuate. Change the assumption and try a zero-return case before treating the estimate as a savings target.
How to measure your actual SIP return
A future-value estimate is different from measuring what your investments actually earned. Each SIP contribution starts on a different date. Do not apply the simple CAGR formula to total contributions as if they were invested together at the beginning. Our CAGR vs XIRR guide with dated cash-flow examples shows how to record contributions, receipts and the final valuation, and why the two calculations can differ.
Can you pause or stop?
Check the AMC or platform’s mandate cancellation and pause procedure. Stopping future instalments does not automatically sell existing units. Existing units remain subject to the scheme’s exit load, lock-in and tax rules. Each ELSS instalment has its own lock-in; cancelling the SIP does not remove that restriction.
Sources and further reading
Useful tools and related guides
Educational information: The Invest Mate does not provide personalised financial advice. Examples are illustrations, not promised returns. Check applicable rules and product documents before acting.
