If you’ve been exploring ways to invest in mutual funds without committing a large sum in one go, a Systematic Investment Plan (SIP) might be your best friend. It lets you invest small amounts at regular intervals, so you can create a routine of wealth-building instead of tackling big lump sums. Interestingly, there are multiple types of SIPs to match different financial goals and incomes. Each one caters to a different need, be it fluctuating earnings or the desire for added flexibility.
In this article, we’ll go through the seven most common types of SIP investment plans and highlight how each can fit into your money strategy.
Regular SIP
A Regular SIP is often the first choice for someone who wants a steady investment routine. Imagine you’re Ritika, a salaried professional from Pune who sets aside INR 5,000 every month into a balanced mutual fund. You don’t need to constantly worry about market ups and downs because you invest the same amount each time. Over a few years, you could build a comfortable corpus through rupee cost averaging and compounding.
Many people pick a Regular SIP for its simplicity. It encourages disciplined saving and makes it easier to plan monthly budgets. The downside is that you invest a fixed sum even if your income changes, which might make you miss opportunities to invest more or less depending on your situation.
Flexible SIP
If your income depends on variables, a Flexible SIP could be a better choice. Suppose Gaurav, a freelancer in Delhi, earns a high payment in some months and a modest one in others. With a Flexible SIP, he can tweak his investment to keep pace with his changing finances. During a profitable spell, he invests more. When things slow down, he cuts back.
This style offers greater control and can help you make the most of market dips (by investing more) or stay afloat when earnings are tight. On the flip side, it demands consistent monitoring, which can be time-consuming if you’d rather set it and forget it.
Step-Up SIP
Some people get regular salary hikes or see their businesses grow each year. A Step-Up SIP fits beautifully in those scenarios. You simply have to decide by how much you’ll increase your monthly SIP each year – maybe 10 percent. If Raj starts with INR 5,000 a month, in the second year, he’ll invest INR 5,500, then INR 6,050 in the third year, and so on.
This approach might look small at first, but those little increments stack up over many years. You end up investing a lot more than you would have in a Regular SIP, which can help you aim for bigger goals. The only catch is that you must ensure your actual income growth matches your step-up commitment.
Trigger SIP
A Trigger SIP is designed for investors who keep an eye on market trends. You set a condition – like a specific index level or a particular fund’s Net Asset Value (NAV), and money is invested only when that trigger is met.
Let’s say Kavita, an experienced stock analyst, decides to invest INR 10,000 each time a certain small-cap index dips below a predetermined level. When the market corrects itself, she’s bought more units at a lower price, boosting potential returns. But this strategy isn’t for everyone. If you’re new to stocks and not sure how to read the market, Trigger SIP can be tricky.
Perpetual SIP
Sometimes, people want to invest for the long haul without worrying about renewing or ending their plans. That’s where a Perpetual SIP shines. If Nisha, 28, aims to build a retirement fund over 25 years, she can choose a Perpetual SIP and keep investing as long as she wants. If she ever wants to stop, she just pauses or terminates her SIP.
It’s a practical option for those who want to benefit from compounding over a long stretch. That said, you should always have a rough target in mind. If you’re investing indefinitely with no clear goal, you might lose track of how your money is performing.
Multi SIP
A Multi SIP lets you spread your monthly investment across different mutual fund schemes within the same fund house. Instead of making separate transactions for each fund, you invest once, and the fund house allocates your amount among the selected schemes.
Imagine Mohan, who wants to invest INR 15,000 a month. If he splits it into a Large-Cap Fund, a Mid-Cap Fund, and a Debt Fund, he automatically diversifies his risk. It’s a convenient route if you like variety but prefer fewer administrative tasks. The caveat is that you’re limited to the offerings of that one mutual fund provider.
SIP with insurance
In some cases, mutual fund houses or financial companies offer SIPs that also include life insurance coverage. If something unfortunate happens, your family receives the insured amount. This can be a real comfort, especially if you’re the main earner in your family.
For example, certain providers like Axis Max Life Insurance have products where the SIP not only invests your money but also provides life cover. It’s a two-in-one combo. The potential disadvantage is that these offerings aren’t very common, and the coverage may only last as long as the SIP is active.
Comparison of different types of SIPs
| Type of SIP | Best For | Flexibility | Risk Level | Special Feature |
| Regular SIP | Salaried individuals with steady income | Low (fixed sum) | Moderate | Consistent investing at set intervals |
| Flexible SIP | Freelancers or those with fluctuating pay | High (variable sum) | Moderate | Adjust investment based on monthly cash flow |
| Step-Up SIP | Individuals expecting periodic income hikes | Medium (scheduled increases) | Moderate | Investment rises every year |
| Trigger SIP | Seasoned investors tracking market levels | High (depends on triggers) | High | Invests only when market conditions are favourable |
| Perpetual SIP | Long-term wealth builders | Medium (no set end date) | Low | Continues until you decide to stop |
| Multi SIP | Diversification seekers | Medium (multiple funds) | Moderate | Invests in several funds with one transaction |
| SIP with Insurance | Investors wanting added life cover | Low (fixed sum with cover) | Low | Provides insurance during the active SIP period |
If you want a blend of financial growth and life cover, a plan from a well-known provider such as Axis Max Life Insurance might check both boxes.
Information is key. Therefore, you should stay informed and choose investment tools that are in sync with your financial goals and risk appetite. You don’t have to strain your finances. SIPs allow you to build a decent corpus through smaller investments, which is ideal for those who prefer to take smaller steps towards a larger goal.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.
Standard T&C apply.
Tax benefits are subject to change as per prevalent tax laws.
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