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A systematic Investment Plan (SIP) is a mode of investing in mutual funds. To invest in mutual funds, one can choose either the lump sum investment route or the SIP route. In SIP, investors can invest in mutual funds at regular intervals. SIP and long term investing is the best combination for earning good returns. Furthermore, SIPs also help in rupee cost averaging, as the investor invests across all the market cycles. There are many types of SIP available in the market. Choosing the right SIP is the key to accumulate wealth. This article covers the 7 different types of SIPs and guides you to choose the best SIP

Long Term Portfolio
Long Term Portfolio

The right mutual funds for your long-term goals with inflation-beating growth plus risk management.

Indicative returns of 10-12% annually

Indicative returns of 10-12% annually

Investment horizon of 5+ Years

Investment horizon of 5+ Years

No lock-in

No lock-in

Long term goals such as retirement or building your wealth

Long term goals such as retirement or building your wealth

7 Different Types of SIPs

SIPs give investors a chance to adopt a disciplined way of investing with just a one time mandate. Through SIP, one can make investments every month or quarter. Investing in SIP will help the investors to generate significant returns in the long run. However, choosing the right kind of SIP is the key. Following are the 7 different types of SIP investments available in India:

  • Regular SIP
  • Top-up SIP
  • Flexible SIP
  • Perpetual SIP
  • Trigger SIP
  • SIP with Insurance
  • Multi SIP

Estimate your mutual fund returns with SIP Calculator

1. Regular SIP

A regular SIP is the simplest type of investment plan. Under this SIP, the investor invests a fixed amount at regular intervals. The SIP frequency can be monthly, bi-monthly, quarterly or half-yearly. Furthermore, there are daily and weekly SIPs as well. However, these are not highly recommended ones. While choosing a SIP, investors can mention the SIP duration, instalment amount and frequency. In a regular SIP, one cannot change the investment amount during the tenure of the investment.  

2. Top-up SIP

Top-up SIP or Step-up SIP allows investors to increase their SIP amount periodically. Many asset management companies have a provision to step up SIPs. Choosing a step-up SIP adds more flexibility to the recurring contributions and helps investors in parking bigger amounts. In other words, when an investor’s income increases, they can simultaneously increase their SIP contributions to save higher amounts. This will help them create their investment corpus faster because of the power of compounding. Therefore, it is advisable to choose SIP plans that offer this facility to top up the investments.

Furthermore, one can step up their SIP plans in multiples of INR 500. For example, if an investor is investing INR 10,000 in a mutual fund scheme and opts for a step-up every one year by INR 1,000. The SIP amount from the 13th month onwards will become INR 11,000. A regular top-up of the mutual fund investments will enable investors to generate their investment corpus sooner. Moreover, it also helps in reducing the effects of inflation on the maturity corpus.

3. Flexible SIP

As the name suggests, a flexible SIP gives its investors the opportunity to alter their investment amount. It is also known as Flexi SIP or Flex SIP. One can intimate the fund house with the changes in the SIP amount or contributions. However, the intimation has to be given at least a week before the deduction date of the SIP instalment. Investors can adjust their SIP amount based on their financial conditions or market conditions. For market conditions, there is a pre-decided formula that allows investors to invest more when the markets are falling and reduce the SIP amount when the markets are high.

For example, if an investor is facing a cash crunch, they can inform the fund house to halt their SIP payments until further notice. This provides the investors to skip their SIP instalments without defaulting.  Similarly, if an investor has surplus cash, they can increase their SIP amount for a certain duration. Therefore, as per the investor’s instructions, the fund house will be able to adjust the SIP amounts.

4. Perpetual SIP

While filling the SIP application form, the investor has to select the tenure of the SIP. If no tenure is specified, then the SIP becomes a perpetual SIP. In other words, the SIP will continue for a duration until the investor provides instructions to the fund house or the manager to stop the investments. Also, in case an investor doesn’t wish to limit their contributions with a maturity tenure, they can voluntarily choose the perpetual SIP option in the application form. This gives the investor an opportunity to stay invested for longer durations and observe the market. And, in the future, they can decide to redeem at any time.

5. Trigger SIP

Trigger SIP is suitable only to those investors who are well aware of the market dynamics and are sure of its movements. In this type of systematic investment plan, it is very important to know when to take the buy and sell positions. Under this type of SIP, investors can set their SIP start date or redeem or switch their SIP once the selected event occurs. The trigger can be set to any event. For example, a favourable market event, or an index level or NAV of the fund or capital appreciation or depreciation. Also, it is important to note that the trigger SIP is recommended only for experienced investors as it incites speculations. It is essential to have sound knowledge and experience to set appropriate triggers effectively.

6. SIP with Insurance

A few asset management companies offer insurance cover if an investor opts for long-duration investments. The initial cover for the insurance is usually ten times the first SIP amount, and it gradually increases with time. Also, this feature is available only for equity mutual funds. It is important to note that term insurance is just an add on feature and doesn’t have any impact on the performance of the fund.

7. Multi SIP

A multi-SIP allows investors to start investing in multiple schemes of a fund house through a single instrument. This helps investors in diversifying their investment portfolio. Furthermore, it also reduces the number of paperwork. Investors can give a single form and payment instruction to start their SIP plans.

Which Type of Systematic Investment Plan (SIP) is Best to Invest?

From the above seven types of SIP, which one is the best sip? That depends on the investor’s goals, income, and knowledge. A regular SIP best suits all kinds of investors who have a regular source of income and who prefer saving up for a secured future. A step-up SIP helps reach the financial goal faster and helps in accumulating a higher amount of corpus as the investment keeps increasing every year. A perpetual SIP is a regular SIP that continues till eternity. It can be both regular as well as step-up SIP.

Flexible SIP is suitable for people with varying income levels, for example, professionals and freelancers. Trigger SIP only suits investors who have knowledge about market dynamics. SIP with insurance is a new type of plan, and investors hardly have options available in the market. Investors should opt only for this type of plan if the fund performance is good and the life cover provided by the fund house is for free. Multi SIP only works when all the mutual funds of a fund house are giving good returns in their category.

SIP is an investment plan that allows investors to invest regularly. Through SIP, one has to invest the same amount regularly or increase the amount of SIP due to market dynamics or having additional income at hand. Therefore, we will compare a regular SIP and step-up SIP and see which one gives better returns over a period of time.


An investor wants to accumulate a corpus of INR 25 lakhs in 10 years. He has an option to invest in a regular SIP and in a top-up SIP. Let’s see the returns and SIP amount needed in the case of a regular SIP and a step-up SIP. Let us assume he tops up his SIP by 10% each year.

Regular SIP

Investment: INR 5,000 a month

Tenure: 10 years or 120 months

Total investment: INR 6,00,000

Expected return: 12% per annum

Expected maturity corpus: INR 11,61,695

Return: INR 5,61,695

Step-up SIP

Investment: INR 5,000 a month

Tenure: 10 years or 120 months

Total investment: INR 9,56,148

Expected return: 12% per annum

Expected maturity corpus: INR 16,87,163

Return: INR 7,31,015

The returns from top-up SIP are higher than regular SIP for investing for the same tenure. If the investor wants to accumulate a corpus of 11.61 lakhs by doing a regular SIP of it would take ten years. But in the case of step-up SIP, the investor can reach the target of INR 11.61 lakhs in 8 years. Hence a step-up SIP is the best as it not only allows investors to reach the target amount faster but also allows investors to combat the effects of inflation. As the purchasing power reduces with a rise in inflation, a higher maturity corpus will increase the investment’s real return.

Check out our article on Best Date for SIP

What Type of SIP Should You Select and How?

Investors should select a SIP type that best suits their financial requirements, knowledge, and goals. A regular SIP allows investors to invest in an SIP regularly without a pause or top-up. A step-up SIP will increase the investment amount of SIP every year. Perpetual SIP is a SIP till eternity. Investors with regular income can invest in all these SIPs.

A Flex SIP best suits investors with irregular income. Freelancers, professionals and people with no job safety can consider investing in this SIP as they have the freedom to increase, decrease, pause and restart the SIP as per their wish.

A Trigger SIP best suits an investor who understands the market and its dynamics. An investor who doesn’t understand investing nor how the market works shouldn’t pick a trigger SIP.

A Multi SIP allows investors to invest in different funds of a fund house. But not all the funds of a fund house tend to perform well. Hence investors have to practice caution while selecting this type of systematic investment plan.

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