Different Types and Benefits of SIP Investments in Mutual Funds

As an investor, you must have heard about the Systematic Investment Plan or SIP. However, did you know that there are different types of such investment plans with their exclusive features?

SIP investments come with additional benefits that potentially help grow your investment.

As of FY26, the Indian mutual fund sector has recorded a folio count or total mutual fund accounts of 25.86 crore. With this increasing participation, if you opt for a fund investment, learn about different SIP types and SIP benefits beforehand.

Different Types of SIPs Available for Investment in India

As of 2025, the overall SIP contribution in mutual funds in India has risen significantly and currently stands at INR 29,445 crore. SIP flexibilities with its different types and their features are some of the key contributors to this milestone:

1.   Regular SIP

Regular SIP is the type which is most common for investors of mutual funds in India. You invest a fixed amount, typically every month, in your chosen mutual fund scheme. As per the SEBI, the minimum SIP amount for fund options is INR 500, making it affordable for most investors. However, depending on fund types and policies, this amount might be different.

2.   Top-Up SIP

It is a type of SIP which comes with further flexibility of increasing your SIP contribution with each instalment. For example, suppose you have chosen a scheme with an INR 1000 SIP. You can choose to increase it by 10% or INR 100 gradually. It lets you capture the power of compounding better than regular SIPs.

3.   Flexi SIP

As the name suggests, this type of SIP comes with higher flexibility in modifying your SIP contributions. Maintaining control over your investment lets you increase or decrease your SIP contribution amount. For example, you might increase your SIP amount when your disposable income is higher and lower the contribution during any financial constraint.

4.   Perpetual SIP

Whether your investment is in equity or debt schemes, staying invested at least for 3 to 5 or even more years is usually beneficial. A perpetual SIP helps with such a long-term perspective as it has no fixed date of maturity, and you may continue investing until you choose to stop your contribution.

Benefits of Investing in Mutual Funds Through SIPs

As you know, what is SIP from the above types, which is investing a small amount periodically, you must note some of its overall key benefits:

1.    Benefit from the Compounding Effect

With SIPs comes the effect of compounding. It means the potential return from your SIP contributions gets reinvested to grow your money faster. Suppose you choose an SIP of 1000 per month in a scheme with a 15% annualised return for 5 years.

Here, your estimated return might be INR 27,342. If your fund performs, this return is higher than an investment option with fixed interest calculation.

2.    Rupee Cost Averaging or RCA

SIPs also allow you to take the benefits of rupee cost averaging. It is a simple concept, where you invest a certain amount regularly and average out your total investment cost over time. Suppose you have an SIP of INR 5000, and when the market is expensive, you buy 50 units at INR 100 each. When the market is less expensive, you buy 62 units at INR 80.

Thus, RCA allows you to buy fewer units when the market is expensive and buy more at a discounted price when the market is less expensive, potentially averaging your investment costs.

3.    Helps With Diversification

As you have seen, SIP investment is quite affordable, and it allows you to diversify your investment. With smaller contributions, you can invest in equity-oriented and debt-oriented mutual funds at the same time. This helps with diversification and potentially spreads risks across asset classes.

Conclusion

Being an investor, you can choose from different sorts of SIPs to increase the flexibility of your investments. Also, with SIPs, capture the benefit of compounding, with diversification and rupee-cost averaging.