Chapter 3: Mutual Funds & SIP
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Day 18: SIP — The Systematic Investment Plan
Small amounts, consistent discipline, magical results
2 min read
📖 The Office Savings Club
In Pete's neighbourhood, there's an informal savings club — 20 members each contribute ₹2,000 on the 1st of every month. No exceptions. The discipline of forced regularity means everyone actually saves.
A SIP is exactly this kind of disciplined, automated, monthly investment — but professionally managed, legally regulated, and with actual equity market returns instead of keeping it in someone's cupboard.
Set it up once. Forget about it. Become wealthy. That's the entire pitch. 🎯
In Pete's neighbourhood, there's an informal savings club — 20 members each contribute ₹2,000 on the 1st of every month. No exceptions. The discipline of forced regularity means everyone actually saves.
A SIP is exactly this kind of disciplined, automated, monthly investment — but professionally managed, legally regulated, and with actual equity market returns instead of keeping it in someone's cupboard.
Set it up once. Forget about it. Become wealthy. That's the entire pitch. 🎯
SIP = Systematic Investment Plan
A fixed amount, on a fixed date, into a fixed mutual fund — automatically every month.
Example: ₹5,000 on the 5th of every month → Nifty 50 Index Fund → directly debited from your bank.
You set it up once on Zerodha Coin, Groww, or directly on the AMC website. The bank auto-deducts. You don't even need to remember. This automation is the entire point.
Example: ₹5,000 on the 5th of every month → Nifty 50 Index Fund → directly debited from your bank.
You set it up once on Zerodha Coin, Groww, or directly on the AMC website. The bank auto-deducts. You don't even need to remember. This automation is the entire point.
SIP's Superpower: Rupee Cost Averaging
| Month | NAV | Invested | Units Received |
|---|---|---|---|
| January | ₹100 | ₹5,000 | 50.00 |
| February | ₹80 | ₹5,000 | 62.50 |
| March | ₹90 | ₹5,000 | 55.56 |
| April | ₹120 | ₹5,000 | 41.67 |
| Total | Avg ₹97.5 | ₹20,000 | 209.73 |
Average cost per unit = ₹20,000 / 209.73 = ₹95.35. Current NAV: ₹120. Profit! You bought MORE units when prices were low — automatically. No market timing required.
SIP Calculator — Compounding in Action
₹10,000/month SIP for 20 years @ 12% CAGR
₹24 lakh
Total Amount Invested
→
₹99 lakh!
Expected Corpus
Disclaimer: 12% is historical Nifty 50 average. Past performance is not a guarantee of future results.
🎉 The Sachin Tendulkar SIP!
If Sachin had invested just ₹100/month from 1984 (age 11) into a Nifty index fund and left it until 2024: roughly ₹80–90 lakh! Total invested = ₹48,000. That's 1,800x return on each invested rupee just from time and compounding. The cricket bat made him famous. This would have made him richer. 🏏
If Sachin had invested just ₹100/month from 1984 (age 11) into a Nifty index fund and left it until 2024: roughly ₹80–90 lakh! Total invested = ₹48,000. That's 1,800x return on each invested rupee just from time and compounding. The cricket bat made him famous. This would have made him richer. 🏏
🎯 Today's Takeaway:
SIP = monthly automated investment in mutual fund. Rupee cost averaging = automatically buys more units when cheap. ₹500/month is enough to start. Discipline + time = extraordinary wealth. Start today, not "next month." Tomorrow: Compounding — Einstein's alleged favourite concept!
SIP = monthly automated investment in mutual fund. Rupee cost averaging = automatically buys more units when cheap. ₹500/month is enough to start. Discipline + time = extraordinary wealth. Start today, not "next month." Tomorrow: Compounding — Einstein's alleged favourite concept!