Systematic Investment Plan (SIP) is one of the most popular ways to invest in mutual funds in India. But did you know that there isn’t just one type of SIP? In fact, there are five major types (and even more variants), each designed to cater to specific investor needs, goals, and risk appetites.
Whether you’re just starting your investment journey or you’re a seasoned professional looking to diversify, knowing the types of SIPs and how they work can help you make better, more informed decisions.
5 Types of SIP
| Feature | Details |
|---|---|
| Main Topic | 5 Types of SIPs in Mutual Funds in India |
| Types Covered | Regular SIP, Top-Up SIP, Flexible SIP, Trigger SIP, Perpetual SIP |
| Best For | Salaried professionals, freelancers, business owners, long-term investors |
| Top Benefit | Customization and discipline in long-term wealth creation |
Understanding the 5 types of SIPs empowers you to tailor your investments in a way that suits your lifestyle, goals, and income. Whether you’re a freelancer seeking flexibility, a salaried individual planning for the future, or an advanced investor wanting to time the market — there is a SIP type for everyone.
What is a SIP and Why Is It So Popular?
SIP or Systematic Investment Plan allows you to invest a fixed amount regularly in mutual funds. Rather than putting in a lump sum, you invest small amounts (say, ₹5000) every month, quarter, or week.
Benefits of SIP include:
- Rupee cost averaging (buying more units when prices are low)
- Power of compounding
- Financial discipline
- Convenience and flexibility
Now let’s explore the different types of SIPs and understand which one might be ideal for your financial goals.
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1. Regular SIP
What It Is:
A Regular SIP is the most common type. You select a mutual fund, decide the amount, and choose the frequency (monthly is most popular). The amount is auto-debited from your account and invested.
Ideal For:
- Beginners
- Salaried employees
- Investors with steady cash flow
Real-Life Example:
Priya, a software engineer, invests ₹5000 every month in an equity mutual fund through a regular SIP. Over 10 years, she builds a corpus of around ₹12 lakhs, thanks to compounding and market growth.
Pro Tip:
Start early. Even small SIPs (₹500/month) started in your 20s can yield significant wealth over time.
2. Top-Up SIP (Step-Up SIP)
What It Is:
Top-Up SIP allows you to increase your SIP amount at fixed intervals (say annually). This aligns your investment with your growing income.
Ideal For:
- Salaried professionals getting annual increments
- Goal-based planners (e.g., child’s education, home down payment)
Real-Life Example:
Amit starts with ₹1000/month and adds ₹500 every year to his SIP. In 10 years, his monthly SIP grows to ₹1500, helping him accumulate more wealth without feeling financial strain.
Pro Tip:
Combine Top-Up SIP with goal-based investing for maximum benefit.
3. Flexible SIP
What It Is:
In a Flexible SIP, you can increase, decrease, or pause your investment depending on your cash flow. Some AMCs allow complete flexibility without penalties.
Ideal For:
- Freelancers
- Small business owners
- Seasonal income earners
Real-Life Example:
Neha, a freelance graphic designer, invests more during peak client seasons and reduces SIP during lean months. This gives her full control without skipping investments entirely.
Pro Tip:
Use AMC mobile apps or online portals to modify amounts as per your income.
4. Trigger SIP
What It Is:
Trigger SIP lets you set triggers like index levels, NAV price, or dates. When the condition is met, the SIP is initiated or adjusted.
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Ideal For:
- Advanced investors
- Those who track the market closely
Real-Life Example:
Raj sets a NAV trigger to buy more when fund NAV falls below Rs. 20. His SIP automatically adjusts to take advantage of dips.
Warning:
This is not recommended for beginners as it requires timing the market.
5. Perpetual SIP
What It Is:
Perpetual SIP continues indefinitely until you cancel it manually. It does not have a fixed end date.
Ideal For:
- Long-term investors
- Retirement planners
Real-Life Example:
Sunita started her SIP in 2000 and it’s still running 25 years later. With no maturity date, her investments continue to grow.
Pro Tip:
Track your portfolio regularly even if SIP is perpetual.
Other SIP Variants You Should Know
Multi SIP
Invest in multiple mutual fund schemes with one SIP instruction. Great for diversification.
SIP with Insurance
Offered by select AMCs, this combines SIP with life insurance cover (often up to 100x the SIP amount).
Note: Terms and conditions vary, and not all options may suit every investor. Always read the scheme documents carefully.
How to Choose the Right Type of SIP
Step-by-Step Guide:
- Assess Your Income Flow – Fixed or variable?
- Define Your Financial Goals – Short, medium, or long-term?
- Check Risk Appetite – Conservative or aggressive?
- Choose SIP Type – Based on your flexibility and discipline needs
- Use Online SIP Calculators to plan amount and tenure
- Consult a SEBI-registered advisor if needed
see also: Get More Returns from Post Office TD than FD: Know How Much You Can Earn
Special in Each SIP FAQs
Q1. Can I switch between SIP types later?
Yes, many AMCs allow changes. You may need to stop one SIP and start another with a new mandate.
Q2. Is SIP safe?
SIP in mutual funds is subject to market risk, but disciplined long-term SIPs in quality funds often yield strong returns.
Q3. What is the minimum SIP amount?
Most SIPs start from just ₹500/month, making it highly accessible.
Q4. Can I pause SIP payments?
Yes, in flexible SIPs and even in regular SIPs with some AMCs, you can pause for 1-3 months.
Q5. Which SIP type is best for retirement?
Perpetual SIP in diversified equity or hybrid funds works well for retirement-focused investing.
