1. SIP means investing a fixed or planned amount periodically
A Systematic Investment Plan is an instruction to invest in a mutual-fund scheme on recurring dates.
Tip: SIP describes how you invest, not what you invest in.
2. The underlying fund determines risk
An equity SIP can be volatile; a debt-fund SIP has different risks. Calling both “SIP” does not make them equally safe.
Note: SIP does not convert a risky asset into a safe one.
3. Regular investing can reduce timing pressure
You buy more units when NAV is lower and fewer when NAV is higher for the same rupee amount. This is rupee-cost averaging, not a guarantee of profit.
Tip: Regular buying smooths entry price; it does not remove market risk.
4. SIP works best when tied to a goal
Set the amount from the required goal corpus, time horizon and expected return assumptions rather than choosing an arbitrary round number forever.
Tip: A SIP should grow as the goal or income grows.
5. Quick check
An SIP in a small-cap equity fund is automatically low risk because it is an SIP. True?
Answer: B - Risk comes from the underlying fund, not the recurring payment method.